Tips for sellers in a buyer's market: It is to your benefit to perform your environmental due diligence

In a buyer's market, sellers of commercial property should think more like their residential counterparts and spruce up their properties before putting them on the market. By affirmatively addressing environmental issues prior to working with a prospective purchaser, sellers can control costs, limit their liabilities and significantly improve their negotiating position. To position a property with an optimal sales price and facilitate a smooth transaction, seller's counsel should retain a respected environmental consultant to prepare the appropriate site assessment for counsel's use in providing legal advice to the seller. Environmental Site Assessments (ESAs) will identify potential environmental issues (or lack thereof), and inform cost estimates for further site investigation, remediation and monitoring. Counsel should work with the consultant to obtain a full and accurate understanding of environmental concerns at the subject property, before the draft ESA report is prepared. ESAs and asbestos and lead paint surveys can support the asking price, indemnities, appropriate environmental escrow, and representations and warranties. ESA reports will also support a seller's access agreements and the terms for post-closing remedial work (controlling costs even where work cannot be completed prior to the transaction). A buyer may use ESA reports to get an overall picture of risk, provide assurance to potential lenders and as an efficient starting point for its own environmental due diligence. Also, ESA reports may inform eligibility for federal or state brownfield assistance. In New York City, sellers may look to the Mayor's Office of Environmental Remediation (OER) as a resource. OER administers the New York City Brownfield Cleanup Program, a program generally open to all real property in the city that isn't already subject to certain state or federal environmental proceedings. The program is intended to streamline the administrative process and facilitate redevelopment. It is the first municipally-run brownfield cleanup program in the country, and OER works closely with property owners to explain remediation requirements upfront and help make cost estimates. A seller can explore how to proceed with OER in a pre-application meeting, and can apply for the program prior to the sale in order to position the property to be sold with an approved cleanup plan. Although the program is relatively new, it is receiving positive reviews from developers, particularly for efficiency. Discovering environmental concerns is common and often will not require active remedial work. For certain contamination, institutional controls like deed restrictions that limit soil disturbance or certain future uses may be sufficiently protective and may not interfere with a buyer's intended use of the property. No one wants to spend money only to find that an asset may be less valuable, but sellers of commercial property may ultimately benefit from proactively undertaking environmental due diligence themselves. Best case, sellers can improve the market position of the property by demonstrating the absence of environmental issues. But even where contaminants are present, sellers avoid wasting time and money preparing for a transaction based on incomplete information and are better positioned to negotiate and manage their liabilities. Even a contaminated property can be an asset. Tricia Foley is a partner and Elizabeth Leaderman is an associate at Day Pitney, LLP, New York, N.Y.