We Solve Tough Real Estate Conflicts
  1. Home
  2.  → 
  3. Real Estate Law
  4.  → How can environmental regulations affect purchase and sale agreements?

How can environmental regulations affect purchase and sale agreements?

On Behalf of | Oct 13, 2022 | Real Estate Law |

If there are environmental regulations in place during the purchase or sale of a piece of real estate, it’s very important to understand exactly what these regulations mean. Remember that environmental due diligence is necessary. Regulations must be followed. Standards must be met. Additionally, the mere fact of having to carry out this due diligence can make its way into the purchase contract.

For example, the sale agreement may be signed with a contingency saying that environmental due diligence will be performed and that the contract is void if the property doesn’t meet these requirements. Essentially, the buyer agrees to make the purchase, and they may even agree to buy the property “as is” in some cases, but they do want to be able to back out of the deal if it turns out that environmental standards cannot be upheld.

How could this happen?

One way that this could happen is if someone was buying a residential unit that wasn’t part of a municipal sewer system. Instead, it had a septic system. The person may agreed to purchase the residential unit, but only on the grounds that the septic system is examined and found to be up to environmental standards. Replacing it or connecting to the municipal system could be very costly and the buyer doesn’t want to have to take on that cost.

Does this make it harder to sell?

There can be situations in which this makes it harder to sell a piece of property. Some individuals may not be interested in looking at property that has any environmental questions. Others may be more likely to offer a lower price because they assume that there are going to be different costs and issues that come up in the future.

But the biggest thing to remember is simply that adhering to the regulations still means that the property is valuable and can be sold as is. If it does adhere to these regulations, it shouldn’t be a problem. Make sure you know about all of the legal steps that you’ll need to take as you work through this process.