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Vendors of property must disclose known latent defects at the property that a reasonable person would agree are material in the circumstances. A latent defect is any defect that is not readily iden- tifi able by the prospective purchaser, but is within the knowledge of the vendor. Generally, environmental issues involving indoor air quality, soil impacts and groundwater contamination are latent. Where a vendor knows about latent environmental impacts, the vendor must disclose. Where there is no known latent environmental defect, the vendor may warrant that, to the vendor’s knowledge, the vendor is not aware of any spills or contamination at the property. Similarly, where there is no known latent defect, the vendor may choose to make no representation about the site condition. In either case, the purchaser may have the option (or as is becoming more common, the obligation) to satisfy itself through its own tests about the environmental condition of the property.


ENVIRONMENTAL LIABILITY CONSIDERATIONS AS A VENDOR


While the potential environmental liabilities will be evaluated on a site-specifi c and case-by-case basis, some questions a vendor should consider during the sale are: • What environmental disclosure am I providing? • What environmental representations and warranties am I pro- viding that the purchaser is relying on?


• Is the sale proceeding on an ‘as is, where is’ basis? • Am I obligating or allowing the purchaser to conduct any inspections or investigations?


• What will occur if contamination is found in the future? And who will be responsible?


• Am I providing an indemnity to the purchaser for losses arising from contamination that I may have caused?


ENVIRONMENTAL LIABILITY CONSIDERATIONS AS A PURCHASER As discussed above, potential environmental liabilities will be eval- uated on a site-specifi c and case-by-case basis. Some questions a purchaser should consider while negotiating the purchase are: • What environmental disclosure is the vendor providing? • Do I need to seek further information to be comfortable with the environmental condition of the property?


• What environmental representations and warranties is the ven- dor providing?


• What right of access and inspection do I have to confi rm the vendor’s representations and warranties?


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• Is the property currently known to be contaminated? Is the con- tamination fl owing off the property?


• Is the liability of the vendor and/or other previous owners or operators going to transfer to me?


• Should I seek an indemnity or a security from the vendor for any potential remedial costs, or future regulatory or litigation costs?


CONCLUSION Vendors and purchasers should always consider environmental liability when evaluating the sale or purchase of a dry cleaning business and/or the land upon which a dry cleaner operated. Both parties must be aware of the potential for regulatory and civil liability, and should attempt to allocate the risk of this liability in their agreements for the sale or purchase. Without this evaluation and allocation of risk, one or both of the parties may carry forward unknown and/or unwanted environmental liabilities. Just because a property is not ‘clean’ does not mean that the investment isn’t right for you, it all depends on the risk tolerance of the vendor and purchaser, and the risk allocation to create a ‘good deal’. n


Jacquelyn Stevens is a Partner, Specialist in Environmental Law Certifi ed by the Law Society of Ontario, Willms & Shier Environmental Lawyers LLP. Prepared with the assistance of Anand Srivastava, Associate, and Amanda Spitzig, Student-at-Law. Contact Jacquie by telephone at 416-862-4828 or by email at jstevens@willmsshier.com.


14 FABRICARE CANADA March/April 2020


71518-004_TEX_Anzeige_Allgemein_Fabricare_Canada_Magazine_EN_86x244_SSP • FOGRA 39 • CMYK • es: 20.02.2020


DU: 24.02.2020


Kanada/EN


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