On March 31, 2014, Governor Pence signed H.E.A. 1005, repealing the Indiana Responsible Property Transfer Law (IRPTL) effective July 1, 2014. The IRPTL was enacted in 1989 to require sellers (and borrowers) to make certain environmental disclosures to buyers (and lenders) regarding property that was to be sold or financed if that property: (i) was the site of any underground storage tank; (ii) was listed on the U.S. Environmental Protection Agency’s Comprehensive Environmental Response, Compensation and Liability Information System (CERCLIS); or (iii) was subject to reporting under section 312 of the Federal Emergency Planning and Community Right-to-Know Act (usually for storage of hazardous materials).
The IRPTL required a Seller (or Borrower) to execute and deliver an Environmental Disclosure Document for Transfer of Property (a “Disclosure”) within thirty days prior to closing of a sale or loan transaction (although this notice period could be waived by the buyer or lender). The IRPTL also required Disclosures to be recorded, which created title and other issues.In 1989 the IRPTL was at the forefront of relatively new federal laws and a focus on independent investigation of environmental issues. However, over the years the IRPTL has become less important (and, in some respects, repetitive and burdensome) as Buyers understood they had to conduct their own due diligence in order to take advantage of certain safe harbors (e.g., “innocent landowner” or “bona fide prospective purchaser” status) available under federal law relating to environmental matters, including the current requirement that they conduct environmental site assessments that satisfy the “All-Appropriate Inquiries” (“AAI”) standard. IRPTL’s repeal is an acknowledgement that Buyers are performing their own due diligence to determine the environmental condition of real estate, even though Sellers should still be required to deliver prior environmental inspection reports and to make basic representations and warranties about the real estate’s environmental condition (e.g., that there are no know adverse environmental conditions or hazardous materials on the property).
Buyer’s due diligence and Seller’s limited representations and warranties generally accomplish what the IRPTL was intended to do without the burdensome process of executing and recording the Disclosure, and the attendant title issues. The question of whether or not a Disclosure document was required had become an impediment to certain transactions, making lenders nervous and increasing Buyer / Borrower loan compliance and closing costs. In the Legislature’s view, the time for the IRPTL has come and gone. We agree with this assessment, and view the IRPTL’s repeal as a positive development for the real estate and lending industry.