Can I lose my loan with an environmental questionnaire?

Question

Ok finally for our first purchase of a duplex in New England, that’s from the 1900 but great potential the bank wants an environmental questionnaire. Well it’s probably gonna have lead! We’re planning on new windows. We went the commercial loan route to get it under an LLC. Will they ask for remediation? I’m worried the loan won’t go through, any one been through this? Should we go conventional loan and then transfer to LLC? Thanks so much

Nicole Varasteh · Answer

Thanks @J Tessier and @Matt Lefebvre for your recommendations, I'll call the banks you all mentioned on Tuesday morning. This would be the commercial loan dept. correct? we really want it under LLC. I read that some use a land trust and then some how connect the LLC to the trust. But that seems complicated and we don't want to lose this deal.

Matt Lefebvre · Answer

@Nicole Varasteh you definitely need to find a different bank.  I've only had one bank blow up a loan before on the basis of lead paint inspections and abatement and I haven't worked with them since.

I echo @J Tessier 's suggestion.  NBT Bank has been my go-to for multifamily loans recently.  Feel free to PM me and I'll send you over my loan officer's contact info.  I've also worked with Enterprise Bank, Northway Bank, and St. Mary's Bank successfully as well.

Joshua Tessier · Answer

I use Paul Godbout from Leaderone in Manchester NH. He has been great for me. I have also had positive experiences with NBT Bank in Manchester NH as well.

Lawrence P. Schnapf · Answer

The questionnaire is the first step in the environmental due diligence process. As a purchaser, you probably dont have much information. If the bank is ordering a phase 1, you have no obligation to respond to the consultant's questionnaire. The consultant will simply have to do its own investigation and determine if your lack of responses impacts its ability to assess the conditions of the property. It is very rare for this to occur for a purchaser. it is better not to complete such a form since you could potentially expose yourself to claims fraudulent or negligent missrepresentation.

In addition to lead and asbestos, you should assess the current and former heating oil tanks, test the water if there is on-site well and evaluate the septic system.

Nicole Varasteh · Answer

The commercial loan dept at our local bank wants to do a possible lead inspection before giving us the loan. The seller will not allow it for obvious reasons, then he would have to disclose this. Maybe we have to go to a diff bank. Do you use a good bank in NH who does commercial loans?

Joshua Tessier · Answer

You use an LLC to protect assets. So if your a multimillionaire then you have assists to protect. If you a regular joe who sucks the equity out of your property then what’s the point of complicating your taxes to protect what assets?  Just get an umbrella policy and your better off in my mind.

As for lead I have never heard of anyone loosing a loan over lead unless a child has elevated lead levels and it’s documented. Then the property is unrentable per the state until the lead has been remediated. But and property built before 197? Something has lead. You can no longer get lead free certifications to my knowledge only lead safe.