When evaluating a loan application, Lenders must be alert to the consequences of hazardous substance contamination at Farmer-owned and/or operated sites. The Lender may be held liable for site restoration costs and any third-party damage claims arising from the contamination if the Lender takes title to contaminated property or if it is determined the Lender "operated" the site either directly or by virtue of exercising a significant degree of management and/or control.
A lien may be placed on a property for the cost incurred for "cleaning up" the property when a federal or state environmental government agency must intervene to clean up a site. This lien may also take precedence over other liens on the property diminishing any value the collateral has to prior lienholders such as the Lender.
The Lender bears absolute responsibility for assuring itself that no environmental issues exist which would cause impairment to the collateral offered. Guarantee payment requests may be reduced or denied if environmental issues are present.
