Tenants can be held liable for preexisting contamination on property they lease under certain circumstances. Tenants can, however, utilize the bona fide prospective purchaser (BFPP) defense against such liability under CERCLA if the owner qualifies as a BFPP. Additionally, EPA recently issued guidance stating that it will treat certain tenants as BFPPs, even when the owner of the contaminated property does not itself qualify for or maintain BFPP status.
Specifically, where the owner does not qualify for BFPP status, a tenant may still qualify if its lease was executed after January 11, 2002, and it meets all of the BFPP provisions in CERCLA:
- all disposal of hazardous substances occurred prior to acquisition;
- the tenant conducted “all appropriate inquiry” into the previous ownership and uses of the property;
- the tenant provides all legally required notices;
- the tenant takes reasonable steps with respect to releases of hazardous substances;
- the tenant provides cooperation, assistance, and access to the property;
- the tenant complies with land use restrictions and institutional controls;
- the tenant complies with information requests and administrative subpoenas; and
- the tenant is not directly liable for response costs or affiliated with a person who is
If a tenant has derivative BFPP status through the owner and the owner loses its status through no fault of the tenant, EPA may treat the tenant as a BFPP so long as the tenant itself meets the BFPP requirements, with the exception of the “all appropriate inquiry” requirement.