Bank wants Environmental Form filled but Seller refuses to!

[Vasundhara Ranjani]

I'm looking at a multi-family property and one of the closing conditions for the bank to approve the loan is an environmental form that they want the seller to fill out.

The seller says that he would open himself to liability if he filled the form out and hence doesn't want to fill it out.

The seller and his agent are very difficult to deal with (rude, abrupt, and generally uncooperative) and the only reason I'm pursuing it is because the numbers look good and it's a strong property.

The bank says the only alternative to the form being filled out is to have an expensive Phase I environmental assessment done.

Are there any other alternatives to this? What are some solutions to move forward?

[Stephanie P.]

Originally posted by @Vasundhara Ranjani:

I'm looking at a multi-family property and one of the closing conditions for the bank to approve the loan is an environmental form that they want the seller to fill out.

The seller says that he would open himself to liability if he filled the form out and hence doesn't want to fill it out.

The seller and his agent are very difficult to deal with (rude, abrupt, and generally uncooperative) and the only reason I'm pursuing it is because the numbers look good and it's a strong property.

The bank says the only alternative to the form being filled out is to have an expensive Phase I environmental assessment done.

Are there any other alternatives to this? What are some solutions to move forward?

Walk away.

In order for the lender to obtain the necessary capital to fund that loan, it has to pass an initial environmental survey.  If there are underground tanks or other potential environmental hazards, it gets passed onto an environmental hazard insurance company and they either insure it or they don't.  If they don't fund it on the initial pass, they may suggest a Phase I and eventually a Phase II, but without the initial survey, they will not do the loan.  Could be the sellers are hiding something and could be they are just hard headed.  I don't know.  I do know that without the survey the loan is dead.  I also know that for many of the lenders we use, if the survey comes back with ANY environmental concerns, the loan is dead.  That means if you do end up buying the property somehow without the environmental survey and then down the road you want to sell it, you will be on the hook for the previous seller's environmental concerns.

Best of luck

Stephanie