Commercial real estate developers now face yet another obstacle to borrowing money. On June 23, Fleet Financial Group made it mandatory that developers buy environmental liability insurance before they can obtain loans of $1 million or more.
While it's clearly an added cost, Fleet says the price is less than developers would pay if they tried to obtain the insurance on their own. Via Fleet, three years of coverage for a wide range of undetected environmental hazards costs $10,000 to $12,000 on a $1 million loan. Many banks, worried about their liability for the growing costs of cleaning up foreclosed properties, likely will copy the move.