How To Decide If You Need A Phase I Environmental Site Assessment

Some businesses and organizations believe that conducting a Phase I Environmental Site Assessment should be a standard practice before purchasing any commercial or industrial property. This is a practice that is meant to reduce the risk of obtaining property that has already been contaminated with toxic waste by a business that was previously located on the property or on properties that are nearby. Others believe that it should only be performed in cases where there is an obvious risk that contamination could exist.

Environmental Site Assessment

The nature of the Phase I Environmental Site Assessment makes it a good option for any potential property buyer that is concerned with environmental liability. It is not an extensive investigation that relies on sampling and analysis to be performed on the property but instead relies on information obtained from previous business records and on interviews of the previous owners, neighbors and others who can provide valuable information. The result of this inquiry will determine whether there is a risk of contamination being on the property and whether a Phase II Environmental Site Assessment is needed or not.

Some things to consider when determining if you need a Phase I ESA are:

  • If you are financing the purchase through a bank or other financial institution, the Phase 1 Environmental Site Assessment may, or may not, be required. If the procedure is performed regardless and an area of concern is identified, it may be used to negotiate the property value if the cleanup is left to you after the purchase is made.
  • While some property management companies prefer to do their own assessment of the property to make it more marketable, others make the choice to go ahead and sell the property with the existing concerns that there may be a risk of environmental liability associated with it and let the responsibility fall in the lap of the new buyer. If that new buyer is you, it could end up costing you a lot of time and money because the seller decided they could live with the consequences.
  • A Phase I Environmental Site Assessment is not just to assess the risk of the property itself. If you know the type of business and processes that have been performed there in the past and feel that they don’t warrant an investigation, you may miss the contamination that has resulted from other business practices in the area. Contamination does not only come from within the operation, but from other operations in the vicinity. The Phase I ESA looks at the surrounding area and determines the potential risk from other businesses as well.

The important thing to always keep in mind when you do a Phase I Environmental Site Assessment of a commercial property is to have a qualified professional to do the procedure. An in-depth understanding of the risks and the factors that can result in contamination is essential to getting an accurate outcome. Keep in mind that failure to get a Phase I Environmental Site Assessment before the purchase of the property can cost you more.