The Superfund Amendments and Reauthorization Act of 1986 (SARA) has dramatically changed certain portions of the previous legislation under Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) in the area of real property transactions. SARA recognized the fact that a landowner who had no connection with the release of hazardous substances at a property would still be liable under CERCLA. To remedy this problem, SARA provided an important defense, known as the "innocent landowner defense", which is contingent upon a defendant having had no reason to know a property was contaminated prior to holding title (42 USC § 9607 (b)(3)(a) and (b)).

To establish an innocent landowner defense, SARA states that "the defendant must have undertaken at the time of acquisition an all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability". SARA further states that in construing the "all appropriate inquiry" provision, the courts will take the following into account:

• Any specialized knowledge or experience on the part of the defendant;
• The relationship of the purchase price to the value of a property if contaminated;
• Commonly know or reasonably ascertainable information about a property;
• The obviousness of the presence/likely presence of contamination at a property;
• The ability to detect such contamination by appropriate inspection

What are the minimum efforts required to conduct an "all appropriate inquiry" to establish the SARA innocent landowner defense requirement?

Prudence suggests that most real estate transactions (especially commercial and industrial) be assessed for environmental impairment prior to consummation of a property transfer, to evaluate the risk of the transfer in light of potential environmental liabilities.

Most lending institutions have established a policy requiring the performance of an all appropriate inquiry known as a Phase I Environmental Site Assessment (ESA), to establish the SARA innocent landowner defense requirement.