USA – NEW JERSEY Law and Practice Contributed by: Nicole Dory, Christina Sartorio Ku, Meredith Rubin and Camryn Goldstein, Connell Foley LLP
17.3 Key Issues in Environmental Due Diligence The most common environmental legal issues that typically arise within the context of transactions in New Jersey involve the discovery of potential contam- ination pursuant to a Phase I, Preliminary Assessment, and Phase II, as described above. These issues are often solved by apportionment of liability within the purchase contract or the establishment of an escrow account by the seller in order to fund any remedia- tion required by the buyer in the future for discovered environmental conditions. Issues relating to the triggering of ISRA are also common. Specifically, if the property qualifies as an industrial establishment using or storing hazardous substances, the transfer of the property will require compliance with ISRA, including the completion of a site investigation and potential remediation of any identified areas of concern. While the applicable regu- lations ordinarily require this remediation to be com- pleted prior to closing, sellers can sign a remediation certification, indicating that the property will be reme- diated after closing, and submit financial assurances, covering the estimated cost of the investigation/reme- diation, in order to close prior to the completion of remediation.
Jersey Spill Act. As such, a Preliminary Assessment, in addition to the typical Phase I, is often performed. The Preliminary Assessment involves a much more in- depth analysis of potential environmental risks includ- ing whether previously generated environmental data is compliant with current regulations. Finally, if certain environmental risks or concerns are identified in the Phase I and/or Preliminary Assess- ment, a Phase II Environmental Site Assessment is often conducted. This Phase II will consist of further investigation, often including sampling, to determine the existence and scope of potential contamination and other environmental issues at a property. 17.2 Disclosure of Environmental Information Sellers of properties are required to make a number of disclosures related to known environmental conditions on site, including the existence of mould, water leak- age, dampness, pests, termites, lead pipes, asbestos, underground storage tanks (USTs), or any conditions that adversely affect the physical structures or air, soil, or water quality on-site. In addition, in recent years, New Jersey has adopted laws requiring the disclo- sure of flood risk information, including whether the property is located in a flood zone, whether it has had flood or drainage issues, and whether it is located in a mapped wetland.
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