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Prospective Purchaser Agreements: Lessees and Subsequent Owners and Operators



Having previously written about the importance of Prospective Purchaser Agreements when purchasing contaminated property in Oregon, I wanted to follow up with two additional and sometimes overlooked details:

1. Although Prospective Purchaser Agreements (PPAs) reference a “purchaser,” PPAs are also available to prospective lessees of contaminated property in Oregon.

Under Oregon law, a person who becomes a facility operator after the acts or omissions that resulted in a release of hazardous substances, and who knew or reasonably should have known of the release when the person first became the operator, is strictly liable for remedial action costs incurred by the state or any other person. The facility operator is often a lessee rather than the owner. Thus, just as a purchaser of contaminated property should obtain a PPA before acquisition, prospective lessees of contaminated property should consider obtaining a PPA before becoming an operator of a contaminated facility.

PPAs must be recorded, so the cooperation of the property owner will be required. If a PPA has already been recorded for a property, a lessee who is not otherwise liable may also benefit from the release of liability provided by the PPA so long as the lessee assumes and is bound by the terms of the PPA and remains in compliance with the terms of the PPA. See ORS 465.327(5).

2. PPAs run with the land.

This means once a PPA is recorded for a property, subsequent owners (and operators) will benefit from the liability protections so long as they comply with the conditions of the PPA. So not only does a PPA reduce the risk of buying contaminated property, it also removes a significant obstacle to resale and likely increases the value of the property.

When it comes to contaminated property, prospective purchasers and lessees alike should consider PPAs before acquisition. Recording a PPA reduces the risk of becoming associated with contaminated property and may increase the property value.

This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.

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