With something like some quirky law suit over lead paint or an environmental hazard you can lose MUCH more that you invest.

A local Environmental company bought a similar property after they completed the cleanup.

What you have to be aware of is the environmental issues. 

And by the way he said, the property may have an environmental problem as he had been dumping motor oil in the back area.

What are the clauses I want to put in in case there is an environmental or other big issue that comes up while I am doing my due diligence ?  

Get a survey, run title, lien search, environmental report  If everything checks out you should be in position to close (assuming you have the equity required) 

(You mentioned traditional banks may not lend because of Environmental issues).  2) The fact that there is more cash in this deal makes it more attractive for a lender to foreclose in the event that the balloon payment cant be met through re-financing.  3) It would be well worth the cost of a ESA report for both partners to understand the environmental issues with the property.  

And although the city's historical legal usage records says that the property was used as a church for the last 45 years, The Phase 1 environmental company has come across maps that show that for a 20-30 year., the property was used as an auto repair shop.

I am a commercial lender for a client here in Chicago. He is currently negotiating to buy a 15 acre parcel where he is currently renting. He is a tenant in the property. The property has been a truck terminal for year...

I agree that you need to be careful, ask about any and all potential problems.. environmental, flooding, property tax increases etc.At the same time think of all the things you could do... rent to own, lease options, niche renting for seniors or veterans,etc.