A low purchase price can make a distressed property look like a fantastic development opportunity. However, if methamphetamine was manufactured there, the cost of making the site usable may be higher than expected – and the low price may not be a benefit.
While a property that served as a meth lab is not automatically off-limits for redevelopment, the real question is whether it can be cleaned up and at what cost. That means a developer needs to know what contamination was left behind, what the cleanup will mean in practical terms and who is going to pay for it all.
Seller disclosures are required by law
Under New Hampshire law, a seller must disclose any known past methamphetamine production on the property in writing to the buyer before the purchase and sale agreement is signed if the property hasn’t yet been determined to meet remediation cleanup standards.
A seller’s disclosure alerts the buyer to the history, but it doesn’t tell a developer how much work needs to be done or what that work will cost. New Hampshire law provides for the Department of Environmental Services or a licensed environmental or hazardous substances removal specialist to determine whether the property meets cleanup standards. The seller should provide any available cleanup and testing records so the buyer can properly evaluate the site.
Who pays for additional cleanup and testing?
A developer would be wise to add a contingency to any purchase agreement that allows time to investigate the property’s status and withdraw the offer if the expense or time required for cleanup makes their project unfeasible.
Both the seller and the developing buyer can negotiate how the costs for cleanup will be handled. They may divide the costs, the seller could agree to complete all remediation before closing or the buyer could agree to do the work in exchange for a lower purchase price.
A former meth lab site can definitely be a viable redevelopment opportunity. However, any agreement must be carefully crafted, with detailed information about who will direct and pay for the testing, work and final determination that the property is clean. An experienced attorney can help make sure that your interests are protected.