Glossary · Doing the deal
Environmental indemnification
In short
This is a clause in a purchase agreement where the seller agrees to cover the buyer's costs for any environmental liabilities that arose before the sale. It protects you from past issues.
What it means in a deal
For businesses with real estate or operations that could have environmental risks, an environmental indemnification clause is crucial. It ensures the seller is responsible for clean-up costs or fines from historical pollution. Always insist on this protection and consider a Phase I Environmental Site Assessment.
Related terms
Common questions about Environmental indemnification
- What if a franchise agreement contains provisions for indemnification that concern the SBA?
- When a Phase I Environmental Site Assessment (ESA) identifies a Recognized Environmental Condition (REC), what are the lender's subsequent responsibilities?
- If a Phase I Environmental Site Assessment (ESA) identifies Recognized Environmental Conditions (RECs), what are the next steps for a lender?
- When is an Environmental Questionnaire (e.g., Form 1081) sufficient for real estate collateral, without requiring a Phase I Environmental Site Assessment (ESA)?
- What are a lender's responsibilities if a Phase I Environmental Site Assessment (ESA) identifies a Recognized Environmental Condition (REC) but recommends no further action?
- What environmental due diligence is mandatory for real estate collateral?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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