Secured Creditors: Exempt from Liability?

Bert Acken.

Secured creditors can be exempted from liability for contamination from properties for which they hold security interests under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), the Underground Storage Tank (“UST”) program under the Resource Conservation and Recovery Act (“RCRA”) and Arizona’s CERCLA-counterpart, the Water Quality Assurance Revolving Fund (“WQARF”).

However, these protections are far from absolute and will be lost if applicable requirements are not followed while a loan is active, or after a lender acquires ownership or possession. Additionally, even if a lender follows the steps necessary to protect itself from cleanup liability, additional efforts should be undertaken before a loan is originated to protect a security interest to the fullest extent possible.

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