In commercial real estate, what do buyers usually require from sellers regarding environmental conditions?

In commercial real estate transactions, buyers typically seek assurances regarding the environmental condition of a property to mitigate risks associated with potential liabilities. A warranty that the property complies with applicable environmental laws is a common requirement because it provides the buyer with confidence that the seller has addressed any pertinent environmental issues prior to the sale. This warranty acts as a form of protection for the buyer, ensuring they are not inheriting any unaddressed violations or liabilities related to environmental regulations.

Such warranties may cover various aspects, including compliance with the Clean Water Act, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), and local environmental laws. By securing a warranty of compliance, the buyer can more effectively gauge the risks involved, and it also provides a legal basis for recourse should issues arise after the property changes hands.

The other options do not offer the same level of assurance or risk mitigation. A signed contract guaranteeing no environmental issues may be unrealistic, as it is nearly impossible to predict unforeseen problems that may arise. Identifying only liabilities through an environmental report may not adequately assess compliance with the extensive array of environmental regulations that govern properties. Lastly, requiring sellers to pay for all past environmental damage could be impractical and difficult to enforce, as it may not always be clear