Lender Liability for Clean Water Compliance - NR&E | Spring 2011
Foreclosing lenders increasingly face environmental liabilities under the Clean Water Act arising from the compliance status foreclosed property. Although a small minority of states has started to address this issue, the overwhelming majority of states and EPA have failed to take measures warning lenders of this potential risk. Failure to take proactive steps to prevent or mitigate this liability can expose lenders and their counsel to substantial fines, civil claims, and criminal action. Lenders and their attorneys need to ensure that extensive due diligence occurs prior to foreclosing on a property to ensure that lenders do not become liable for the previous owner’s environmental noncompliance.