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n recent years, polyfluoroalkyl substances (PFAS), also known as "forever chemicals," have become a pressing concern for land and business owners, as well as environmental and real estate professionals. The increased regulatory scrutiny of PFAS management has led to heightened awareness and concern among real estate professionals regarding the legal and liability impacts on property values.

    A $1.1 billion settlement in February against DuPont for negligent manufacturing and handling of PFAS has set a precedent, while the Environmental Protection Agency's (EPA) regulatory actions have sent a strong signal that PFAS will pose significant challenges to real estate owners and professionals. The EPA's designation of two specific types of PFAS as "hazardous substances" under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) has exposed property owners to potential strict liability lawsuits.

    PFAS are a large group of synthetic substances created in the 1940s, used in various products, and pose significant environmental challenges due to their persistence and migration. They can take over 1,000 years to break down and contaminate soil, groundwater, and air. The EPA's new drinking water standards for PFAS will impact public water systems and real estate development projects with small community water systems or private wells.

    The increased liability exposure imposed on property owners by the final rule will complicate real estate transactions and require comprehensive due diligence to mitigate risks. Purchasers may request additional testing, increasing due diligence costs and time, while lenders may reassess their willingness to finance properties contaminated with PFAS. The lack of regulatory standards for PFAS contamination levels and remediation requirements creates uncertainty for prospective purchasers.

    The EPA's actions will have an immediate impact on real estate transactions, particularly in the conduct of Phase I environmental site assessments (ESAs) and potential Phase II ESAs. Purchasers may request more concessions or walk away from transactions due to the new drinking water standards. The financial community's response to PFAS-contaminated properties remains a critical concern, with lenders reassessing their willingness to finance such properties.