Buying or selling property that has tested positive for environmental groundwater contamination can be a deal breaker. Before killing the deal, however, make sure actual, not fictional, contamination is present. False positive groundwater test results can happen. Upon first glance of reports identifying groundwater contamination, buyers are ready to walk away. Buyers will attempt to renegotiate seeking significant purchase price concessions or escrow fund set asides for future remediation expenses. Sellers’ attorneys must scrutinize the environmental investigations and reported results. Chemical laboratory errors, shoddy field work and poor well installations often can result in reports finding groundwater contamination that simply does not exist. Two recent matters highlight the need for additional scrutiny once the “results” are in hand.
Case 1
A few days before a scheduled settlement, we, seller’s attorneys, received an environmental report from the buyer’s attorney which showed that after three rounds of testing groundwater monitoring wells recently installed by buyer, some base neutrals, including Bis (2-ethylhexyl) phthalate (also known as “DEHP”) and most priority pollutant (heavy) metals, including arsenic, beryllium, chromium, lead, mercury, nickel and selenium, were present in the groundwater at levels which exceeded New Jersey Department of Environmental Protection’s (NJDEP) groundwater quality standards (GWQS). See N.J.A.C. 7:9C, Appendix Table 1 for Specific Groundwater Quality Criteria. As a result, the buyer’s attorney demanded a price reduction, an escrow for future remediation expenses and broad environmental indemnifications. Failing to meet those demands, the buyer would walk.
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