There are many reasons a Phase I Environmental Site Assessment (ESA) might be needed before purchasing a commercial property:
- The most obvious—oil tanks or chemical storage bins have been dumped on your site or on sites adjacent to yours.
- Your lender might require it, as many lenders do for larger projects.
- Your attorney might recommend it, because the site itself or the neighborhood has a history of problems with oil spills or chemical leaks, or because you are buying a high-profile property that might be a litigation target.
- The pre-purchase building inspection identifies evidence of potential environmental problems. A Criterium Engineers inspection includes a walk around the site to assess the drainage, landscaping, and related issues. If we see signs of possible environmental damage—isolated and otherwise unexplained areas of dead vegetation, for example—we would recommend an ESA.
An Environmental Site Assessment serves two purposes:
- It identifies environmental risks. No one wants to discover that they have purchased a Superfund site, along with the clean-up obligations and legal liabilities related to it.
- The second purpose is defensive. In addition to satisfying yourself that the property you are buying is free of environmental risks, an ESA will counter allegations from a future buyer who discovers pollution on the site and accuses you of withholding that information. The study provides an “innocent man” defense. It documents that that you had no reason to suspect environmental problems on the property when you purchased it.
What is the difference between a Phase I and a Phase II Environmental Site Assessment?
A Phase I assessment is a visual inspection, supplemented by the collection of data and historical information about prior uses and previous environmental problems on the site. We are looking primarily for issues related to oil—spills or leaks from underground tanks that would affect the groundwater. The visual inspection and research will focus on both the subject site and surrounding sites, because environmental problems on other properties could affect its neighbors.
A Phase II assessment digs deeper, literally. If our visual inspection or the information we collect identifies the potential for environmental damage, we would suggest a more intensive sub-surface examination. This could include coring to obtain soil samples, drilling to find oil or other contaminants, or even bringing in a backhoe to dig deeply and extensively on the site. We would recommend a Phase II ESA only if the Phase I assessment suggests the need for it. While Criterium Engineers does not perform these inspections, we coordinate them for clients.
Before you close on your next commercial property, make sure you know exactly what you’re buying, above and below the surface.
At Criterium Engineers, we help investors, lenders, and property owners move forward. If you’re considering a purchase and aren’t sure whether a Phase I Environmental Site Assessment is right for you, contact Criterium Engineers today.