Whether you are purchasing contaminated property, alleging that your property value was diminished because of a hazardous discharge, or are seeking a property tax reduction, a qualified real estate appraiser can be key to your success. Environmental attorneys frequently assemble teams of qualified professionals in order to get the right message across.

While there are many very good appraisers in the market place, when an environmental issue is on the table, more than just a very good appraiser will do. You need an appraiser who has worked with contaminated property and understands the issues associated real or alleged contamination. One that stands out is Michael Hedden, MAI, of Lawrenceville, New Jersey. Recently, in the landmark case of Custom Distribution v. Perth Amboy (U.S. Bankruptcy Court, New Jersey), Mr. Hedden represented a property owner in a case concerning the method of determining property diminution for property tax assessment purposes. Hedden's complex formula was adopted by the Court and this case is often cited by attorneys in other similar cases.

I recently spoke to Mr. Hedden about those issues concerning the appraisal of contaminated property. He stated that when a property is contaminated an appraiser can help by preparing an analysis so that the owner or user can understand the nature of the environmental risk that he/she faces. The environmental condition is usually an impairment to its value and is discussed in light of the property's highest and best use.

According to Hedden, if properly trained, the appraiser can act as a consultant to assist his client in maximizing his position in a real estate transaction involving contaminated property. Knowledge of the various brownfields laws found at both the State and Federal levels and the preparation of a market study allows the appraiser to become part of the team in the ultimate reuse of the contaminated property.

When retained for contaminated property projects, Hedden advised that his assignment traditionally starts with the market study for the property in understanding who would be the most probable users of the subject property. He then reads and rely upon the findings provided by environmental expert concerning the nature and extent of the environmental conditions and relates that information in assessing the impact upon the valuation of the property in light of the potential users ascertained in the market study. The property is traditionally appraised as if uncontaminated and then appraised in its contaminated state to measure the value difference between the clean and dirty perspectives.

Much is mentioned about environmental "stigma." According to Hedden, stigma is the diminution in value caused by the fact that a property was once contaminated. In the marketplace, there is often a value reduction that occurs because the purchaser of once contaminated property incurs some risk and takes over a property that has been tainted and is worth less than if the property had never been contaminated. Market evidence suggests that stigma varies from situation to situation based upon the perception of environmental risk.

The information provided in this column is written by Stuart Lieberman,a practicing environmental attorney, and is for general information purposes only. It is not legal advice and should not be used in place of legal advice.

Stuart Lieberman, Esq., and IRED.Com, Inc., will not accept any responsibilty for any reliance on the information in this column or any damages whatsoever resulting from reading this column.