Limit Real-Estate Liability

Have a question not listed here? Call Ron Spencer @ 1.800.673.7830. EMG welcomes your environmental inquires which we will discuss without charge or obligation.

How do I avoid environmental issues at settlement? Do environmental assessments help?

The best way to avoid last-minute problems before settlement is to conduct a thorough site history and clarify any potential environmental contamination. Also, consider all obvious concerns like underground storage tanks, asbestos and mold issues. Better to address these issues before listing a property and to have all necessary documentation and reports ready for disclosure. Full, comprehensive environmental assessments, or Phase I Reports, are not always necessary but knowing the history of a property before you buy is always a good idea.

What are Phase I, a Phase II, and a Phase III?

These designations represent the typical stages in an environmental project. The first step (Phase I) is research and assessment of potential concerns. The second phase (Phase II) involves sampling and testing to qualify and quantify the presents of contamination. The final stage (Phase III) is the remediation, clean up, or documented monitoring of any identified environmental concern.

Phase I= Determines if there evidence to suggest an environmental concern

Phase II= Tests to determine existence and/or scope of contamination

Phase III= Addresses concerns, remediates and/or brings property into compliance

What is a Phase I Report?

Within the industry, Phase I is used in two ways: to describe a specific standard, and generically, to describe the first stage of a project (as described above). The formal ASTM-defined assessment Phase I assessment includes an extensive examination and research of a property, its history, adjacent property use, a title search, aerial photographs, and maps and review of any prior environmental reports. It is typically performed in conjunction with the purchase, sale or refinancing of a property and required in most commercial or manufacturing real estate transactions.

Are there different types of Phase I environmental site assessments?

Yes, depending on how the term is being used. There is one formal ASTM-defined Phase I. When referring to the generic investigative stage, there are three industry-standard types:

1. Formal Phase I

  • Requirements and standards defined by ASTM Phase I guidelines
  • Most common
  • Most comprehensive
  • Most costly
  • Extended turnaround time approximately 4-12 weeks
  • Includes testing and remediation recommendations and cost estimates

2. Customized Site Assessment

  • Testing standards defined by ASTM
  • Targeted investigation and research
  • Narrowed scope of recommendations
  • Agreed parameters by owner, buyer, seller and/or lenders
  • Typically less costly
  • Faster turnaround time 2-4 weeks
  • Includes testing and remediation recommendations and cost estimates

3. Environmental Transaction Screening

  • Defined by ASTM
  • Limited investigation
  • Database and questionnaire-based research

Why do I need a Phase I?

The buyer or lender associated with a real estate transaction frequently requires an environmental site assessment. It is used to limit financial liability associated with environmental contamination. The most common type is a formal Phase I Environmental Site assessment, which investigates multiple sources to provide a comprehensive overview of environmental problems associated with a particular property. There are certain properties or transactions that may qualify for a more streamlined environmental site assessment. The most limited type of assessment is called an Environmental Transaction Screen.

Why do I need a Phase II or Phase III?

Phase I assessments typically exclude sampling and testing. A Phase I only identifies potential concerns and recommends how to qualify them. If potential for environmental liability is discovered in any environmental assessments, follow-up testing is typically required by lenders and buyers. This testing stage, referred to as a Phase II, rules out, qualifies, and quantifies specific contaminants. If results indicate the need, a Phase III remediates, restores or monitors a property to bring testing results within acceptable limits. There are various regulatory agencies and site-specific standards that drive remediation requirements.
EMG welcomes your environmental inquires which we will discuss without charge or obligation. We will provide up-front estimates for projects and, in most cases, conduct free walkthroughs of potential projects.

Have a specific question? Call Ron Spencer at 1-800-673-7830