In the real estate world, you may have heard the term, environmental site assessment. There are two standard types of environmental site assessments (ESAs): Phase I and Phase II. Typically, a Phase I ESA involves records research, whereas a Phase II ESA involves environmental sampling and testing. But when is a Phase I ESA required? Here, Care Environmental Remediation Services discusses this process.
What a Phase I ESA Entails
Conducted by a qualified environmental professional, a Phase I ESA is an initial study done to determine past ownership and usage of a particular location. The goal is to determine if and how chemical contamination may be present on that site. The firm conducting the ESA will review property records, site photos, and tax maps. They will conduct interviews with relevant parties and review local, state, and federal databases to gather as much information as possible. They will also look at adjacent properties to see if they pose any kind of risk.
While a Phase I ESA will include a site visit and a visual assessment of the property, it does not include any air, water, or soil testing. Testing and sampling are conducted as part of the next step – a Phase II ESA. Phase I and II ESAs are standardized investigations, and the requirements for ESAs are governed by the American Society for Testing and Materials (ASTM).
When a Phase I ESA May Be Necessary
Phase I ESAs are commonly used when a prospective buyer is considering purchasing property, especially a commercial or industrial site where chemicals may have been used. There are many reasons why a buyer might need a Phase I ESA. If a buyer is using a bank or other lending institution to finance a property purchase, the lender might require an ESA as a condition of their loan. In this case, the lender is using the ESA as a risk management tool – they’re not sure if contamination is present at the site, so they want more information before they provide financial backing.
A buyer’s legal counsel may recommend an ESA for the same reason. Buying an industrial property without an ESA is a bit like buying a house without a home inspection: you don’t really have a complete picture of what you’re purchasing. Without an ESA, you won’t know what problems might exist on site until after the purchase goes through.
A buyer who pays cash can choose to forego an ESA, but it is a risk. This is because federal environmental law requires that a buyer conduct a certain level of due diligence to ascertain if contamination exists at a site they are purchasing. Without an ESA, the buyer could be legally and financially responsible for any required site remediation. An ESA is an initial expense that can save a lot of money down the road.
Learn More about Phase I ESAs from Care Environmental Remediation Services
In answer to the question, “When is a Phase I ESA required?” your legal counsel is best equipped to advise. However, it’s important to be aware of the possibility of needing this service so that you’ll be better prepared to navigate the process. Care Environmental Remediation Services provides Phase I ESAs for customers in Northwestern New Jersey and the surrounding area. To schedule a free consultation, contact us today.