USA – ALABAMA Law and Practice Contributed by: John M. Johnson, Lana A. Olson, W. Larkin Radney IV and Brian P. Kappel, Lightfoot, Franklin & White, LLC
17. Transactions 17.1 Environmental Due Diligence
17.2 Disclosure of Environmental Information Although Alabama is a caveat emptor state and has no general state-level disclosure requirement, condi- tions affecting health and safety must nevertheless be disclosed. This includes things such as lead-based paint, asbestos, mould or radon. The Alabama Depart- ment of Environmental Management plays a critical role in the regulatory framework affecting property in the state. The Alabama Real Estate Commission web- site contains further information about environmen- tal issues in property transactions, as does the Ala- bama Department of Public Health. Alabama’s fraud and consumer protection statutes provide potential recourse for a purchaser who claims material disclo- sures were known but not made. Note that caveat emptor typically does not apply to new builds. 17.3 Key Issues in Environmental Due Diligence Coastal regions in Alabama typically have stricter regulations related to development, so it is important to thoroughly review and understand local laws, in addition to state and federal laws. With any trans- action, however, it is important to evaluate potential on-site liabilities as well as compliance with various environmental permits.
It is typical to conduct environmental due diligence as part of merger and acquisition, finance and prop- erty transactions in Alabama depending on the nature of the transaction and the property type. Companies often hire consultants to perform Environmental Site Assessments (ESA) to determine potential environ- mental risks to property and can include both a Phase I (non-intrusive evaluation of potential environmental liabilities) and Phase II evaluation (conducted to con- firm the presence and extent through physical testing when Phase I indicates potential contamination). It is important to conduct additional diligence into permits, licences, approvals and compliance history for a sub- ject property for the local, state and federal level. With respect to environmental covenants, ADEM maintains a Registry of Environmental Covenants that is avail- able to the public upon request. Alabama’s wetlands and coastal areas also often require particular atten- tion due to the critical ecological issues involved. When wetlands are involved, Alabama has two prima- ry agencies that regulate those areas: ADEM and the Alabama Department of Natural Resources (ADCNR). Certain Alabama counties where coastal or wetland areas are found often have established wetland rules that are important to consider.
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