Environmental Exposures and Lender Concerns

Environmental Assessments (cont.) An Environmental assessment does not eliminate environmental risks. Examples Borrower becomes insolvent because of costs incurred to comply with environmental cleanup Environmental lien attached to the bank's collateral significantly reducing the value of the collateral ⚫ Even if the bank cannot be held liable for the cleanup, will the bank be able to sell the collateral before the environmental issues have been addressed Permitting or regulatory costs associated with operation Do not protect from environmental tort/property damage action (example - adjacent property owner action against convenience store UST owner that received NFA) 32

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