• When the Indemnity Fails

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When the Indemnity Fails: Insurance as a Back-Stop

Access to capital and stricter lender underwriting standards are often cited as significant hurdles to buyers. Increasingly, environmental impairment liability insurance is being required by lenders as a condition of securing financing. For sellers, whether public or private entities, finding buyers for properties with known environmental impacts, or those that may have such impacts, can be equally challenging. The allocation of liability for pre-existing contamination can be back-stopped with Premises Environmental Liability (PEL) insurance to satisfy lender obligations and to provide powerful protection for the buyer (and its lender) from potential environmental liability, including claims for the costs associated with the investigation, remediation and subsequent monitoring of contaminated properties. The payment of the applicable premium can be negotiated as  part of the applicable purchase and sale agreement and, in turn, can help sellers convince wary buyers that they will not end up paying to clean-up pollution that they did not…Log In to Read Full Article

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