Real Estate ownership poses risks of environmental
liability. Under the federal "Superfund" law, an owner or operator of a
location where there has been a realize of hazardous substances that threaten the
environment can be ordered to take remedial response measures. Other legal sources of
similar liability often exist. Thus the understanding of any potential for environmental
remedial liability associated with real estate is very important and it should be obtained
prior to actual acquisition.
Mergers & Acquisitions raise
issues of possible liability, not only on account of real estate ownership and operation,
but because of past or present liabilities and duties of the entities to be acquired or
merged. The liabilities may exist because of past contractual dealings, off-site
shipment of hazardous materials, or may be present due to environmental regulatory
requirements that are not adequately understood or appreciated by the existing entity or
organization that is on the other side of a business merger or acquisition.
Restructuring a business for tax or
other advantages is relatively common. The proper legal and economic evaluation of
what liabilities go with entities involved or created in a restructuring is important to
individual owners of the resulting entities and for tax and legal reasons. Unless adequate
reserves or other assets sufficient to defray environmental liability are left with an
entity as a result of a reorganization, the other entities that survive and shareholders
receiving cash or assets may be the target of efforts to recover remedial costs.