Like homeowners, many business owners who have begun to experience success, dream of owning their own office condo or small office building. However, the actions by the Environmental Protection Agency (EPA) have discouraged commercial property ownership. The EPA and its state affiliates have begun cracking down on the liability and costs of  contaminated soil cleanup in some areas - most notably California.

If you are considering purchasing - or even renting - a commercial site, make sure you have environmental cleanup insurance. This warning goes likewise for those selling a business. For example, we recently assisted the owner of a dry cleaners. The relatively harmless chemicals utilized in the cleaning process are considered to be hazardous substances. The EPA's favorite fine is $25,000 plus cleanup costs. The EPA hoped to get this fine once from the buyer of the business, and again from the seller (since he had contributed to creating the situation). It did not matter to the EPA that the buyer was only renting the facility from the seller.

The buyer was smart enough to purchase a pollution cleanup policy that covered him, and also added a provision in the lease where the seller assumed any environmental and permit problems. The seller's only option was to keep the property continuously in use as a dry cleaner, since this suspends the EPA's cleanup efforts, and to place the land and building in a corporation where the sole asset was the property. That way, the EPA could bankrupt the corporation but not the seller. This approach may not protect you, as it depends on the developing case law in your state. Consult your attorney about this issue, but whatever you do, do not ignore it!