Lender Liability

Dry Cleaner Settles Foreclosing Lender RCRA Action

We previously discussed the RCRA lawsuit filed by a bank that had foreclosed on a residential property that turned out to be impacted by contamination from an adjacent dry cleaner in Forest Park National Bank v Ditchfield.  The bank had alleged that vapors migrating from the contaminated groundwater and soil constituted an imminent and substantial endangerment …

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Ct Allows Environmental Escrow Claim Agst FDIC To Proceed

What happens to a remediation escrow account when the funds are deposited in a bank that is subsequently closed and Federal Deposit Insurance Corp (FDIC) is appointed as a receiver? Some of the issues that need to be considered are illustrated in Kuruvilla Edukutharayil v. FDIC, 2013 U.S. Dist. LEXIS 8840 (N.D.Ill. 1/23/13). In this …

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Ct Allows CERCLA Claim Agst Bank To Proceed In Methane Case

Back in October 2011, we discussed a failed $35MM development project where a bank sought damages from three environmental consultants for failing to anticipate methane gas problems at the development site. The plaintiff, BancorpSouth Bank, was a successor by merger to The Signature Bank that had financed the project. The project consisted of 150-acre site that …

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NYC OER Issuing Comfort Letters To Facilitate Real Estate Transactions

EPA and some state environmental agencies may occasionally issue “comfort letters” to facilitate a particular brownfield project to assuage concerns of developers or lenders about their potential liability. However, regulators have made it clear that they do not have the resources to review conclusions in phase 1 or phase 2 reports generated during routine real …

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CMBS Special Servicer May Pursue Guarantor Despite Environmental Policy

ORIX Capital Markets, LLC v. Cadlerocks Centennial Drive LLC, 2013 U.S. Dist. LEXIS 6081 (D. Mass. 1/15/13) involved a relatively small commercial loan but offers lots of lessons for borrowers, their counsel and environmental consultants. In this case, Salomon Brothers Realty Corp. (Solomon) extended a ten-year loan in the amount of $1.925MM to Cadlerocks Centennial …

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New SBA SOP 50 57 May Establish Best Environmental Practices for Foreclosures

SBA has issued a new Standard Operating Procedures (SOP) 50 57 “7(a) Loan Servicing and Liquidation “  that consolidates SBA procedures for administration of 7(a) Loans that are in “regular servicing” and “liquidation” status. The new SOP becomes effective on March 1st. Back in June 2012, SBA had revised its SOP In June 2012, SBA …

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Bank Agrees To Reimburse EPA for Post-Foreclosure Removal Action Costs

We have frequently written on the heightened risks that lenders face when foreclosing or taking control of the property of defaulted borrowers. See Ohio Bank to Reimburse EPA. Despite several high-profile enforcement cases such as the HSBC case in New York that illustrate the potential exposure that lenders face when they take control over a borrower’s …

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PA Bank Agrees to Reimburse EPA For Removal Costs at Owned Property

We have previously discussed how banks can find themselves saddled with environmental liability from bank-owned properties they have acquired when they purchase assets of other banks. See Acquisitions Bring CERCLA Liability to Banks The latest example is In the Matter of Hamburg Mills Creek Superfund Site, Docket No. CERC-03-2013-004 where Wells Fargo agreed to reimburse …

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Ohio Bank to Partially Reimburse EPA For Removal Costs Related To Defunct Borrower Facility

An Ohio bank agreed to pay the United States EPA $8K in past response costs incurred by EPA to remove hazardous waste drums at a facility that had been owned by a defunct borrower. The amount the bank agreed to pay represented approximately 10% of the EPA’s response costs. The notice of the proposed Agreement …

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Trustee Bank Agrees to Removal Action Settlement with EPA

JP Morgan Chase Bank entered into a Settlement Agreement For Recovery of Past Response Costs (Settlement Agreement)  for a matter captioned In In The Matter Of Browning Lumber Company Superfund Site, Docket No. CERC-03-2007-0028D where the bank agreed to reimburse EPA for $1.28 million in removal costs incurred at a former wood processing facility rural Bald Knob, …

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