Beginning this month, the U.S. government can now block foreigners from taking possession of real estate anywhere in the country when it concludes the deal may threaten U.S. national security. In the past, only foreign investment in U.S. businesses required the parties to consider the risk that the government would object on national security grounds. Now parties entering into a broad array of real estate deals with foreigners affecting land in particular parts of the country will also have to consider these risks, even if they do not involve any investment in a U.S. business.
Foreign clients investing in the U.S. know there are risks of litigation and conflict that they might not anticipate when conducting business at home. One area, however, that is usually a particularly rude surprise are the U.S. laws relating to environmental matters, particularly relating to environmental contamination of land. One might think that a party not at fault for creating contamination would be safe, but that's not always the way U.S. law works when it comes to Superfund sites. These are sites around the U.S. where hazardous substances in the environment threaten human health or the environment, and clean-up is required.
Thanks to a system of “joint and several” liability, each potentially responsible party may be responsible for the entire cleanup of a site absent contributions from others. Potentially responsible parties in Michigan alone, were reported by the Michigan government to have contributed over $599 million to Superfund clean-up before 2016. Paying even a small percentage of such figures can be costly.
Our next installment in our Doing Business in the U.S. series explains the essential structure of U.S. laws governing such environmental risks. It tells you who can be held liable, and what defenses to liability are possible. It tells you how to avoid assuming liability inadvertently when investing in real estate. There is an old adage: An ounce of prevention is worth a pound of cure. These words of wisdom are particularly apt in describing how a bit of caution before investing in real estate can significantly reduce the risk of substantial liability under environmental laws. Enjoy!
One of the things any active investor in the United States almost always needs is a place in which to operate its business. Buying or leasing property can be tricky, however. For example, one can face liabilities by merely becoming a lessee of real property with environmental problems, such as contamination from prior uses. Zoning regulations might not allow a company to use the property as planned. Disputes or judgements associated with real property can create huge headaches for a new owner or tenant, alike.
Foster Garvey’s International practice group comprises a cross-disciplinary group of attorneys practicing in areas ranging from business transactions, immigration, maritime, government regulatory work, transportation and logistics and estate planning. The group members include bilingual and multicultural attorneys who are well-versed in handling these subject matters in a cross-border context. A number of attorneys have been actively practicing in the international arena since the early 1970s.