When purchasing a piece of property here in Tennessee or elsewhere, the potential buyer goes through numerous steps in order to complete the due diligence portion of the purchase. In some cases, an environmental assessment will be part of that process. This is done to determine whether any environmental issues exist on the property that may require mediation, which could affect the terms of the purchase.
The assessment’s three goals are to identify any issues, propose ways to mitigate those issues and determine whether any of the environmental effects will remain serious issues even after steps are taken to mitigate them. It is important to have a qualified and experienced individual perform the assessment. The requirement for an assessment could come from numerous sources such as the mortgage lender, the government or an engineer.
After the conclusions in the assessment are reviewed and verified, the buyer may need to decide whether to continue with the purchase if the effects are significant. Any efforts at mitigation may be too costly and time-consuming for the potential buyer. Of course, it all depends on the type of business the purchaser runs. In fact, in certain industries, environmental concerns could take precedence over other concerns.
Because the outcome of an environmental assessment could be a “deal-breaker” for a buyer, it would probably be a good idea to include a contingency in the purchase and sale agreement. Cleaning up environmental issues could be a costly endeavor whether here in Tennessee or elsewhere. A buyer may want to make sure that he or she has a way out of the deal if necessary. Otherwise, the contract could specify how any mitigation would be handled and paid for between the parties.