07 May 2010

Environmental Due Diligence for Residential Loans

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Environmental due diligence is rarely performed by either purchaser or lender in residential transactions. However, with increased foreclosure activity, lenders are being confronted with residential environmental issues and the financial costs and legal headaches that they can entail. This article is written to advise lenders in Michigan.

Residential Property
The U.S. Environmental Protection Agency defines “residential” properties as single-family residences of one- to-four dwelling units, including accessory land, buildings or improvements that are exclusively for residential use. A property with more than four units is considered commercial property and will not be addressed in this article. This definition of residential would also not include undeveloped multifamily properties (commercial residential developments).

Under Michigan law…

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