Two commercial property owners find themselves responsible for decades-old environmental contamination because they failed to conduct proper environmental due diligence before their purchase and they bought short-tail, claims-made insurance policies with a claims-in-process exclusion that did not offer any protection against long-tail environmental claims.

Under federal and state environmental laws, people who buy a contaminated property are strictly liable for the investigation and remediation of every molecule of environmental contamination on the property from the beginning of time, no matter how it got there and no matter how much it costs to clean it up, until they achieve regulatory closure.

If, however, a buyer can establish that he is a bona fide prospective purchaser, then he may be able to buy the property free and clear of such liability, provided that he meets certain conditions, such as not impeding remedial efforts and not aggravating the spread of contamination.

In an article that I recently published, I cover the issues these property owners faced, discuss what happened to the purchasers and provide my thoughts on how the outcome could have been different.