LENDER FREQUENTLY ASKED QUESTIONS
A: Each lender has their own policy on managing environmental risk. However, as more lenders become aware of the new changes and risks associated with environmental issues, they are requiring more comprehensive reports such as the ASTM E-1527-21 report.
A: The work MECC does to comply with the new standard does NOT take any longer to complete. However, there is now greater emphasis on reviewing regulatory documents that may be available for the site or adjacent properties. Obtaining these documents in some cases will take longer than anticipated.
A: Bank policy may have a provision for a lesser environmental report (database/historical review or transaction screen) on smaller loans especially in a re-finance situation. MECC can provide whatever style report requested to help with mitigating environmental risk.
A: Dry-cleaning chemicals can impact a site for many years as they do not dissolve easily like petroleum products such as oil, gasoline, diesel fuel. The only way to determine that no contamination was caused by the historical operations is to conduct a phase II investigation.
A: The value of the property may be significantly impacted if contamination is present in the soil/ground water/air. Loans are typically issued based on the value of the property so understanding the environmental conditions is an important component in underwriting a commercial real estate loan
PURCHASER FREQUENTLY ASKED QUESTIONS
A: MECC does provide reliance letters for a lending institution if the report was prepared within the ASTM recommended shelf life of 180 days. Our firm charges $500.00 for this service.
A: MECC does provide reliance letters for a lending institution if the report was prepared within the ASTM recommended shelf life of 180 days. Our firm charges $500.00 for this service.
A: Ordering the ASTM E1527-21 report which meets the definition of the All-Appropriate Inquiry (AAI) rule, entitles the buyer the protections under innocent landowner defense. Speaking with a lawyer familiar with these laws is advisable.
A: For informational purposes only. As the buyer you will need a report addressed in your name to qualify for the Innocent landowner protections stated above. As the new standard was released and approved by the EPA in February of 2024, chances are the report a seller wants to share does not meet the new standard.
A: In a purchase, a buyer should be able to use who they are comfortable with as part of their “Due Diligence” and have a contractual relationship with that firm. Many lenders will accept the report but may charge a fee for one of their approved vendors to review.
A: Insurance is an important requirement in today’s business environment. MECC carries the following coverages
Commercial General Liability Insurance with minimum limits of (I) One Million Dollars ($1,000,000) per accident and Two Million Dollars ($2,000,000) in the aggregate (applicable on a “per project” basis); (II) Two Million Dollars ($2,000,000) for Products Completed Operations; (III) One Million Dollars ($1,000,000) for Personal and Advertising Injury; Importantly, CGL policies must not contain commonly included exclusions for: Action Over or Employee Injuries, Height Limitations, Labor Law, Gravity Restriction, Explosion, Contractual Liability, Work in the Five Boroughs, or Residential Work. Professional Liability/Errors and Omissions on a claims made basis with limits for each claim not less than $1,000,000 per claim/$2,000,000 aggregate. Contractors Pollution Liability for all work in which with limits of not less than $1,000,000 per occurrence and $2,000,000 in the aggregate; Umbrella or Excess Liability Insurance to cover all the prior coverage with aggregate limits of $5 million.
Workers’ Compensation/Employer’s Liability Insurance including occupational disease for all employees as per statutory limits, and such coverage shall include Employer’s Liability Insurance with limits of One Million Dollars ($1,000,000) per accident, disease and employee or unlimited coverage where required by applicable law.