Often, the purchaser agrees to assume all such liabilities regardless of whether they arose prior to or after the purchaser’s acquisition of the facility. The purchaser also commonly provides a release of liability and indemnity to the seller. The costs associated with the purchaser assuming these obligations and liabilities are then deducted from the value of the assets being acquired to arrive at the transaction price. This price is frequently “upside-down,” with the seller paying the purchaser to acquire the property and assume its obligations. At closing, environmental trusts are used to fund remediation escrows to ensure the proper allocation and distribution of funds used in the remediation and site closure process. This provides sellers with added protection that escrowed funds are used properly and milestones are met as the project progresses.

Asset Purchase Agreements (APAs) are another tool used in the ELT process which combine the negative value of environmental liabilities with the positive value of real estate and other assets attached to the property. Assuming the value of the real estate is high compared to the cost of remediation, this often results in more favorable economic terms to the seller.