Note: Published on the EDR Insider

Risk of Vapor Intrusion Materializes

“Vapor intrusion” conditions are a growing concern for commercial real estate lenders as well as property purchasers and environmental professionals conducting due diligence. Many episodes in recent years have shown that a toxic vapor plume underground can behave very differently than the same substance in liquid form. The migration of these toxic vapors from the ground into a structure can create significant health hazards, liability, and adverse impact to the property’s market value. The vapor can originate from toxic substances contaminating the soil of the property itself or adjoining properties.

dry cleaner For example, during a recent refinancing for a loan involving a shopping center in California with an onsite dry cleaner, complacency over vapor intrusion cost the borrower dearly. The bank originally issued the loan in 2004, knowing that there was a limited vapor plume beneath the property. The loan was later securitized on the condition that the borrower perform minor cleanup. The servicer of the CMBS deal never followed up, the bank assumed it had, and all the borrower did was submit test results to the state and wait for a response that never came. Three years later, research conducted for the refinancing revealed that the untreated plume had grown to the size of a baseball field. What would have been a $50,000 cleanup of the limited plume back in 2004 ended up costing the borrower close to $1 million in 2007.

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This entry was posted on Tuesday, July 15th, 2008 at 1:35 am and is filed under ●Brownfields - Miscellaneous.

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