Key Legal Risks When Buying a Gas Station in Michigan

Buying a gas station in Michigan can be a strong investment, but it’s far from a simple

transaction.

Beyond the purchase price, there are legal and regulatory risks that can significantly

impact the value of the deal if not properly addressed upfront.

Environmental Liability

Environmental exposure is one of the most significant risks in gas station transactions.

Under federal and state environmental laws, liability for contamination (such as leaks

from underground storage tanks) can transfer to a new owner, even if the issue existed

before the purchase.

Proper due diligence should include:

• Environmental site assessments (Phase I and, if necessary, Phase II)

• Review of prior contamination or remediation efforts

• Compliance with state and federal regulations

Fuel Supply Agreements

Many gas stations operate under long-term fuel supply or branding agreements.

These contracts often control:

• Fuel supply contracts

• Pricing structures

• Branding requirements

• Capital improvements

• Deficiency gallon terms

Understanding these terms is critical, as they directly affect profitability and operational

flexibility.

Regulatory Compliance

The petroleum industry is heavily regulated at both the state and federal level.

Buyers must ensure compliance with:

• Licensing requirements

• Environmental regulations

• Inspection and reporting obligations

Failure to comply can result in fines, delays, or operational shutdowns.

Hidden Contractual Obligations

Not all risks are immediately visible.

Gas stations often come with:

• Existing vendor agreements

• Lease obligations

• Equipment financing arrangements

A thorough legal review can uncover obligations that may not be apparent during initial

negotiations.

Making an Informed Investment

The goal isn’t to eliminate risk entirely, it’s to understand and manage it.

With the right legal strategy and due diligence, buyers can move forward with

confidence, knowing the investment aligns with their long-term goals.

If you’re buying, selling, or operating a gas station in Michigan, the right legal guidance

can help you avoid costly mistakes. Contact Sadecki & Associates at 248.328.1300 to discuss your situation.