Michael is purchasing a property in Salem, Massachusetts that is listed as having no known environmental issues. After signing the purchase and sale agreement with an environmental contingency, a Phase I Environmental Site Assessment reveals that the property is a 'disposal site' as defined under MGL Chapter 21E, with prior oil contamination. Michael invokes the environmental contingency and cancels the contract. The seller claims Michael must complete the purchase because the contamination was pre-existing and the seller had no knowledge of it. Under Massachusetts law, which statement is most accurate?
Correct Answer
B) Michael may cancel the contract under the environmental contingency regardless of the seller's knowledge, because MGL Chapter 21E imposes strict liability on property owners for contamination
Under MGL Chapter 21E, Massachusetts imposes strict liability for contamination, meaning that a property owner can be held responsible for cleanup costs regardless of whether they caused or knew about the contamination. The environmental contingency in Michael's purchase and sale agreement allows him to cancel if contamination is discovered during the contingency period. The seller's lack of knowledge does not negate Michael's right to invoke the contingency, nor does it change the fact that the property is a Chapter 21E disposal site. Michael properly invoked the contingency based on the Phase I findings.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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