Negotiate Environmental Warranty to Avoid Hazardous Substance Damage

July 26, 2010
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You can suffer if your office building or shopping center space becomes contaminated by hazardous substances. Depending on what your lease says, if hazardous substances are found in your space, a court could rule that you’re responsible for cleaning it up--even if you didn’t put the substances there. And you could face financial problems. For example, you may have to close down your business during the cleanup. And health fears could drive away customers and undermine employee morale.

To prevent this from happening, ask your owner for an “environmental warranty” in the lease. The environmental warranty says that the owner promises you that the space isn’t contaminated by hazardous substances. Your environmental warranty should require the owner to:

• Disclose any hazardous substances it knows about;

• Hire an attorney to defend you if you are named as a defendant in a lawsuit that claims the space is contaminated by hazardous substances;

• Agree to pay for any cleanup costs; and

• Allow you to terminate the lease if the hazardous substance contamination causes an interruption of your business for a certain period.