How PFAS Contamination Can Affect Your Property Value

Over my 35 years in environmental investigation and over 150 property Phase I/due diligence projects, I can’t state strongly enough that a thoughtful and detailed property contamination assessment can either save or cost you as much as the property value.

The impact of PFAS contamination will be far greater than most of the chemicals that I dealt with. PFAS is more difficult to detect. There are many more versions of PFAS being discovered, and we are still working to understand all the health implications.

In addition, if found in the property’s soil and/or groundwater it will be very difficult to remove or reduce! The good news is that we are rapidly developing new tools to complete cleanup.

In this article, I reveal what I’ve learned through decades of experience investigating property contamination and uncover the hidden threat to buyers and sellers of PFAS contaminated real estate.

Commercial property sales and purchases have always required careful consideration of the potential risks that current or previous owners/tenants may have used and disposed of hazardous materials on the property.

Now, the emergence of PFAS contamination has introduced new complexities that can derail deals, reduce property values, and create long-term legal and financial liabilities for both the seller and the purchaser.

As awareness and regulation of these “forever chemicals” intensify, buyers, sellers, and real estate professionals must understand how PFAS in soil and water can affect property transactions and due diligence.

Due diligence is the process buyers use to investigate a property before purchase, often including environmental site assessments (ESAs).

Standard Phase I ESAs were historically focused on petroleum products, heavy metals, and solvents—but not PFAS.

As of July 2024, federal law now requires that property due diligence include review of two PFAS compounds (PFOA and PFOS), and more are likely to follow.

Real-World Implications:

• Undetected Contamination: If PFAS aren’t part of your due diligence checklist, you might inherit liabilities unknowingly.

• Regulatory Traps: Some states (like California, Michigan, and New Jersey) now mandate PFAS testing during transactions or for properties with private wells.

• Migration Matters: Contaminants like PFAS travel—meaning your site could be affected by neighbors’ historic uses, not just what happened on-site.

PFAS contamination often triggers liability under CERCLA (Superfund law)—even if the current owner had no role in the pollution.

• Cleanup Liability: Under environmental laws, property owners can be held responsible for cleaning up PFAS, even if they did not cause the contamination. Remediation can cost millions of dollars and take years.
• Regulatory Uncertainty: As stated previously, the EPA is currently regulating PFOA and PFOS as hazardous substances, which will increase reporting and cleanup obligations.
• Disclosure Obligations: Sellers in several states must disclose known PFAS contamination, and failure to do so can result in lawsuits or fines. It is not all bleak, some states such as Ohio, Michigan, and few others have instituted programs that may allow a purchaser of contaminated property to escape liability for the contamination.

• Reduced Value: Properties with PFAS contamination often see a 20–30% reduction in value or may become unsellable until remediation is complete.
• Financing Challenges: Lenders may refuse to finance contaminated properties or require costly environmental insurance.

PFAS contamination is no longer a theoretical risk—it’s disrupting high-stakes real estate transactions across the U.S.

The following real-life examples show how unrecognized PFAS liabilities can turn promising deals into financial disasters:

PFAS are not just a legal or regulatory concern—they’re a public health emergency.

• Liver damage and immune system suppression
• Developmental issues in infants and children
• Thyroid disorders and endocrine disruption
• Increased risk of kidney and testicular cancer

• Soil: PFAS disrupt microbial ecosystems and plant growth.
• Water: They dissolve easily, contaminating drinking water supplies.
• Air: Emissions from factories can settle into soil and water far from the source.

In recent years, the U.S. Environmental Protection Agency (EPA) has taken decisive steps to rein in PFAS contamination, signaling a shift that has enormous implications for real estate transactions. The most significant move came with the formal designation of PFOA and PFOS—two of the most common and hazardous PFAS compounds—as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as Superfund law.

This designation isn’t just symbolic. It opens the door for widespread enforcement actions that can impact current and former property owners alike. Under CERCLA, if PFAS releases are identified on a property—even if they occurred decades ago—the EPA can now require property owners to report those releases and fund or participate in costly cleanups. These obligations may apply even to parties who didn’t cause the contamination, introducing retroactive liability into many real estate deals.

Adding to the pressure, the EPA has also finalized enforceable drinking water standards for multiple PFAS compounds, including PFOA, PFOS, GenX, PFBS, PFHxS, and PFNA. Public water systems will be required to test for these compounds and implement treatment if levels exceed the Maximum Contaminant Levels (MCLs), which are now set in the parts per trillion—a testament to both the toxicity and mobility of PFAS.

For buyers, sellers, developers, and lenders, this means one thing: PFAS can no longer be ignored. They must be treated with the same gravity as asbestos, lead, or petroleum contamination.

While the federal government sets the baseline, many states are forging ahead with their own aggressive PFAS regulations, creating a fragmented and evolving compliance landscape.

States like New York, Michigan, New Jersey, and California have enacted some of the most stringent soil and water cleanup standards in the nation.

• In New Jersey, for instance, any private well involved in a real estate transaction must now be tested for PFOS.
• Michigan maintains one of the most active PFAS testing and mapping programs, with entire communities flagged for groundwater contamination.
• In California, PFAS regulations now extend beyond water and soil to include consumer product bans, placing additional liabilities on manufacturing and warehousing properties.

These laws aren’t just about cleanup—they’re reshaping how properties are marketed, valued, and financed. Many states now maintain publicly accessible databases of known PFAS-contaminated sites, which, while helpful for transparency, can cause significant property devaluation. Listings in these databases often lead to stigmatization, more complicated disclosures, and additional environmental reviews before a sale can proceed.

Real estate professionals operating in multiple jurisdictions must now navigate a maze of overlapping regulations, which change frequently and vary widely in scope and enforcement. Ignoring a single state requirement—like failure to test a well, disclose prior contamination, or meet local cleanup thresholds—can derail deals and open the door to litigation.

If you’re considering the purchase of a commercial or industrial property—or even a large residential parcel—PFAS must be part of your due diligence strategy. While traditional Phase I Environmental Site Assessments (ESAs) focus on petroleum hydrocarbons, solvents, and heavy metals, they often exclude PFAS testing unless specifically requested.

Buyers should insist on PFAS-specific testing, especially for properties near:

• Airports and military bases (which historically used firefighting foams)
• Landfills or wastewater treatment plants
• Industrial zones with known chemical use
• Farmlands treated with biosolids or septage

Beyond testing, buyers should request detailed site histories and conduct interviews to uncover past uses that may have involved PFAS. Reviewing state-maintained databases of known or suspected PFAS sites is another smart move that can prevent surprises after closing.

The goal is simple: identify PFAS risks before they become your responsibility—because under current law, ignorance is not a defense.

Sellers may be tempted to downplay PFAS risks, especially if the site hasn’t been formally tested or listed in public databases. But this strategy is shortsighted. As PFAS scrutiny intensifies, failure to disclose known contamination (or even known historical uses that could suggest contamination) can result in:

• Deal termination or delays
• Lawsuits from buyers, neighbors, or regulators
• Penalties for noncompliance with disclosure laws

Proactive sellers are choosing to conduct pre-sale PFAS testing, especially in high-risk sectors like manufacturing, warehousing, or agriculture. Identifying potential problems early allows sellers to shape the narrative, plan remediation if needed, and adjust pricing or warranties accordingly.

In some states, sellers may also be eligible for cleanup support or “liability shields” under brownfield or voluntary cleanup programs. Taking advantage of these programs can reduce legal exposure and increase buyer confidence.

Financial institutions have largely caught up to the realities of PFAS. Many now require borrowers to complete PFAS-specific environmental reviews as part of their loan underwriting process, especially in sectors flagged as high-risk.

Lenders are increasingly including PFAS in their environmental risk models, and in some cases, they’re refusing to finance transactions unless:

• The property has tested below state or federal PFAS limits
• An escrow fund is established to cover future cleanup
• Environmental insurance policies are secured to mitigate long-term risk

Insurance carriers, too, are tightening PFAS coverage. General liability or property insurance policies often exclude PFAS claims entirely unless a specific rider or endorsement is added. That means parties involved in real estate financing must vet environmental policies carefully to ensure they cover potential PFAS-related claims.

For both lenders and insurers, the lesson is clear: PFAS risk is real, long-lasting, and growing. Incorporating PFAS into risk management practices is no longer optional—it’s essential.

1. Activated Carbon Filters
   Granular activated carbon (GAC) systems are a popular short-term solution, especially for residential or small community water systems. These filters are effective at trapping certain PFAS molecules, but their lifespan is limited, and they require frequent replacement and monitoring.
2. Ion Exchange Resins
   For more complex or high-volume systems—such as those used by municipalities, food processors, or manufacturers—ion exchange resins can offer improved efficiency and specificity. These systems exchange PFAS molecules for less harmful ions, capturing a wider range of compounds than GAC alone.
3. Foam Fractionation
   Used primarily in industrial applications, this method separates PFAS from water by leveraging their tendency to accumulate at air-water interfaces. Though promising, it works best on high-concentration PFAS sites and requires additional treatment for final disposal.
4. Soil Excavation and Offsite Disposal
   In cases of severe soil contamination, especially near the surface or in shallow groundwater tables, excavating and removing the contaminated soil may be the only effective option. However, this approach is cost-prohibitive for large sites and raises additional concerns around transport, permitting, and landfill acceptance.

The scientific community is racing to develop better solutions for PFAS destruction, not just containment. These include:

• Thermal Destruction: Using extremely high temperatures (e.g., incineration, plasma arc technology) to break PFAS bonds at the molecular level. These methods are effective but currently energy-intensive and expensive.
• Electrochemical Oxidation: A promising method that uses electricity to trigger chemical reactions that destroy PFAS in water. Pilot studies are underway with encouraging results.
• Bioremediation Research: Although PFAS are resistant to natural degradation, researchers are exploring engineered microbes and enzymes that may eventually offer a biological cleanup method.

While these technologies aren’t widely available yet, progress is steady—and as regulations tighten, demand for scalable PFAS destruction solutions will explode.