Before You Buy a Brownfield: Keep the Bona Fide Prospective Purchaser Defense Intact

• All Appropriate Inquiries (AAI) alone do not secure liability protection under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
• Buyers must satisfy ongoing “continuing obligations” to maintain the bona fide prospective purchaser (BFPP) defense
• Missed follow-up investigations or unmanaged site conditions can expose owners to cleanup costs, financing challenges and lost redevelopment opportunities

For organizations acquiring brownfields and other environmentally contaminated properties, liability protection is often a critical part of the business case. Many buyers understand the importance of conducting AAI through a Phase I Environmental Site Assessment (ESA) before acquisition to understand the site’s condition. Fewer recognize that this is only the first step.

The BFPP defense under CERCLA can protect purchasers from liability for pre-existing contamination, even when environmental conditions are known before acquisition. However, buyers must meet specific requirements to qualify and maintain that protection.

To qualify as a BFPP, buyers must meet the following threshold criteria before purchasing the property:

• Acquire the property after January 11, 2002
• Complete AAI before acquisition
• Have no affiliation with a liable party
• All disposal or release of hazardous substances must have occurred prior to acquisition
• Comply with continuing obligations after acquisition

The final requirement is often where projects encounter risk.

A Phase I ESA may identify recognized environmental conditions such as historical underground storage tanks, petroleum impacts or evidence of past industrial operations. These findings often require follow-up action.

Maintaining BFPP status requires property owners to:

• Comply with land use restrictions and institutional controls
• Avoid interfering with existing environmental remedies
• Take reasonable steps to prevent or limit contaminant releases

Ignoring known environmental conditions can weaken or eliminate liability protections, regardless of who caused the contamination.

Failure to meet BFPP requirements can affect more than legal liability. Developers, investors and property owners may face:

• Increased exposure to cleanup costs
• Delays or denials in project financing
• Reduced eligibility for environmental grants and redevelopment funding
• Greater scrutiny during future transactions

Organizations pursuing brownfields redevelopment projects should view environmental due diligence as an ongoing risk management strategy rather than a one-time transaction requirement.

Environmental liability protection is most effective when ownership of post-acquisition obligations is established before redevelopment planning begins.

After acquisition, continuing obligations become a core element of site governance and operational decision-making, not a legal afterthought. That means translating environmental findings and closing commitments into clear procedures that guide construction activities, property management practices and long-term site use. Assigning accountability early helps preserve liability protections, reduce compliance risks and prevent redevelopment decisions from undermining legal safeguards.

Consider these actions:

• Assign ownership for continuing obligations across legal, environmental, construction and property management teams
• Create a documentation process for inspections, notices, access requests and site condition changes
• Confirm that institutional controls and land use restrictions are reflected in design, construction and tenant plans
• Revisit the risk plan when new information, site work or redevelopment changes affect exposure pathways

The best-protected projects do not leave BFPP compliance in the closing file. They carry it into the decisions that shape redevelopment, operations and long-term site value.

Purchasing and redeveloping brownfield properties can create value, but environmental liability protection depends on more than a strong site plan. This series explains how buyers, municipalities, Tribal nations, lenders and redevelopment partners can manage CERCLA risk through timely due diligence, disciplined documentation and strategic planning. The takeaway for decision-makers is clear: CERCLA risk management works best when liability protection is built into the project’s full life cycle, from acquisition planning through redevelopment.

• Before You Buy a Brownfield, Protect the Deal With All Appropriate Inquiries
  Why All Appropriate Inquiries (AAI) and a current Phase I environmental site assessment help buyers identify environmental risk before closing
• Before You Buy a Brownfield: Know What CERCLA Does and Doesn’t Exempt
  How CERCLA exemptions and defenses can limit liability for certain brownfield owners and why due diligence and documentation remain essential.