Cozen O’Connor: Lender’s Right to Waive Its Real Property Security Interest in Environmentally Impaired Property [Korek Land Company, Inc's Commentaries & Bulletins]

Lender’s Right to Waive Its Real Property Security Interest in Environmentally Impaired Property [Korek Land Company, Inc's Commentaries & Bulletins]

Paul Rutter, a member of Cozen O'Connor's Real Estate Practice Group, discusses a lender's right to waive in Korek Land Company, Inc.'s Commentaries & Bulletins. Until recently, California law generally required all lenders with real property security, even those with environmentally impaired security, to use foreclosure as their sole remedy in the event of a default. This posed a substantial risk for lenders with environmentally impaired real property collateral because under certain federal laws, a lender who forecloses on such property may be held liable for the environmental remediation for the property. A recently enacted California statute gives lenders the option of waiving their real property security interest in environmentally impaired property and pursuing the borrower directly on the debt; thereby avoiding potential liability for the remediation of environmental contamination of the property. 

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Paul S. Rutter

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prutter@cozen.com

(310) 309-4510


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