The Comprehensive Environmental Response, Compensation, and Liability Act — CERCLA, or Superfund — imposes strict, joint, and several liability on current property owners for the cost of cleaning up hazardous substance releases, even if the owner did not cause the contamination and did not know about it at the time of acquisition. This liability framework is the reason environmental due diligence became a standard part of every commercial real estate transaction in the United States. A buyer who acquires contaminated property without performing proper due diligence can find themselves personally liable for cleanup costs that vastly exceed the property's value, with no effective defense.
Congress recognized the harshness of strict liability and created three statutory defenses for purchasers who did not contribute to contamination. The innocent landowner defense protects a buyer who, at the time of acquisition, did not know and had no reason to know of any contamination, provided the buyer conducted All Appropriate Inquiries before the purchase. The bona fide prospective purchaser defense, added in 2002, protects buyers who acquire property knowing it is contaminated, provided they satisfy All Appropriate Inquiries and additional post-acquisition continuing obligations. The contiguous property owner defense protects owners of properties contaminated solely by migration from a neighboring site.
Qualifying for any of these defenses requires completion of All Appropriate Inquiries — in practice, a Phase I Environmental Site Assessment conducted under ASTM E1527-21 by a qualified environmental professional, plus the user questionnaire completed by the prospective purchaser. The rule is prescriptive, and failure to meet any element can void the defense entirely. Bona fide prospective purchaser status further requires the buyer to take reasonable steps after acquisition to stop any continuing release, prevent exposure, and cooperate with response actions — obligations that can require real post-closing compliance work and documentation, not just a clean Phase I at the time of purchase.
Beyond the federal statutory defenses, sophisticated acquirers also protect themselves through environmental insurance policies, prospective purchaser agreements with state and federal regulators, comfort letters from EPA, and voluntary cleanup program enrollment. The voluntary cleanup route is particularly useful for brownfield redevelopment, where the state agency issues a no further action letter or equivalent that gives the developer a clean slate to proceed. Every major CRE deal involving property with any environmental history should have environmental counsel review the CERCLA exposure and document the buyer's defense strategy in writing before closing.
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