NEW YORK CITY-When it comes to environmentally damaged property, it’s a buyers’ market, with most potential purchasers opting to turn tail and run, according to new research conducted by Boston’s CFO Research Services on behalf of locally based Chubb Environmental Solutions Inc.

According to the CFO survey, more than 33% of chief financial officers report that a business transaction has failed because of unresolved environmental issues. Among heavy manufacturers, 60% reported that they have had a deal fail because of environmental concerns.

The most common stumbling blocks include refusal, by either buyer or seller, to clean up contaminated property (59%), and failure to disclose contamination (29%). Inability to secure insurance scuttled deals in roughly 10% of the cases studied.

“CFOs, other senior executives and even boards of directors are genuinely concerned about the high cost of environmental cleanups–which can run into the hundreds of millions of dollars,” says Michael J. Murphy, president of Chubb Environmental Solutions. “Many companies are seeking to simply avoid the risks altogether when they have a choice rather than to take on the costs of dealing with contaminated properties.”

Much of the concern among potential buyers of environmentally compromised properties stems from growing concerns over government regulation and litigation. That concern is unlikely to be quelled by the survey’s finding that more than one-third of the companies surveyed have been investigated by a state or federal agency over environmental concerns. Moreover, 76% of companies investigated were fined, while 38% percent faced other consequences, including mandatory cleanups or shutting down a facility.

“Although there is clearly increased attention on environmental risk management, there is still room for improvement,” says Murphy. “Manufacturers have been dealing with these issues for years, but financial and professional services firms have only recently begun to recognize their exposure to environmental issues.”

While air and groundwater contamination are routine concerns for manufacturers, airborne microorganisms, black mold and other indoor air quality issues also affect firms that operate in office buildings.

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