Key Factors in Negotiating Environmental Indemnities

Representations related to the environmental history of a property should carve out everything that is disclosed by the environmental reports, writes Alexander.

ROSELAND, NJ—Most commercial real estate lenders require indemnification for environmental liability. This requirement is generally reasonable in light of the fact that lenders should not incur liability arising from hazardous substances merely because they have security interests in contaminated properties.  However, a careful analysis of requested environmental indemnities should be performed to seek to significantly limit the liability of indemnitors. Below are some paramount provisions that environmental indemnitors should carefully consider as they maneuver through the environmental landscape and negotiate the scope and terms of their indemnities:

Consider when indemnities should terminate—after payoff