Managing Lender Liability for Environmental Risks: Due Diligence, Loan Documentation, Workouts, Foreclosure, Insurance
TBD
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Real Property - Finance
- event Date
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will review lender liability under federal and state environmental laws. This program will discuss risk management practices lenders should adopt to minimize environmental liability, how these policies may differ depending on the type of financing transaction and the nature of the loan, and how borrowers may navigate the varying requirements of lenders when seeking loans to purchase properties or refinance existing loans.
Federal and most state environmental laws contain secured creditor exemptions that may shield lenders from owner or operator liability for the cleanup of hazardous substances. However, these secured creditor exemptions vary by state and often do not have “bright line” tests for satisfying these safe harbors so lenders may inadvertently fail to qualify for these exemptions and incur direct liability for cleanup.
Lenders face their greatest liability during loan workouts and foreclosures. Besides direct environmental liability, lenders can also suffer indirect impacts such as where a borrower is unable to repay its loan because of cleanup costs or where contamination may decrease the collateral value.
Lenders need to develop environmental strategies to minimize liability. These policies include pre-loan environmental due diligence, environmental provisions in loan documentation including an environmental indemnification and environmental insurance.
Listen as our panel of experts reviews recent lender liability cases, discusses how lenders can tailor their risk management strategies and provides steps lenders can take during each phase of a loan to preserve their secured creditor exemption. The panel will also highlight alternative strategies in case a lender inadvertently fails to satisfy the secured creditor exemption.
- Lender liability under federal and state environmental laws
- Defenses to environmental liability
- Developing appropriate due diligence for the particular type of lender such as balance sheet lenders, asset-based lenders, conduit lenders, non-bank lenders, community banks and lenders participating in SBA financing
- How due diligence may differ for traditional commercial mortgages, CMBS, CLOs, bridge loans, construction loans and SBA lenders
- Negotiating loan documentation, indemnification agreements and other loan documentation
- Best practices for workouts and foreclosures
- Special lender liability rules for underground storage tanks
The panel will review these and other key issues:
- What are the elements of the secured creditor exemption?
- What are the key components of a lender environmental risk management program?
- How to tailor environmental due diligence for a particular transaction, type of loan and property use
- How to use reps and warranties, loan covenants and indemnity agreements to manage environmental risks
- Strategies for minimizing liability during loan workouts
- What types of environmental insurance are available to manage environmental liability?
- Federal and state regulatory initiatives for managing environmental risks
- Strategies for borrowers to help get lenders comfortable with environmental risks at a property
- How lenders can use environmental policies to mitigate risks and how borrowers may use these policies to address lender concerns
