The Commercial Real Estate Informational Portal

Welcome to

Welcome to the Commercial Real Estate Expert Blog! A host of industry leading real estate professionals, lawyers, and consultants providing the latest in real estate relevant news and advice.

Environmental Due Diligence: Phase I ESAs and Other Options

If you are buying a commercial property, you need to do environmental due diligence.  The gold standard for due diligence is the Phase I Environmental Site Assessment.   The Phase I ESA is basically a research project into the properties current and past use and how these uses could potentially affect the environment.   As a buyer, you want to make sure that you don’t get stuck cleaning up someone else’s environmental mess, so the ASTM 1527-05 Phase I ESA is the most appropriate tool.

For Lenders however, the full Phase I Environmental Report is not always warranted particularly for smaller or less risky transactions.  Our lender clients sometimes ask for environmental reports that are less comprehensive and expensive than the Phase I ESA.   A few options that are available are:

Environmental Transaction Screen:  The Environmental Transaction Screen consists of a Site Visit by an environmental professional, the review of an environmental database report, and very limited historical research.   The Environmental Transaction Screen is about half the price of the Phase I ESA and has a scope of work defined by ASTM E1528-06.  

Environmental Database Reports:  The Environmental Database Report involves the review of an environmental database report by an environmental professional and a short letter report in front of the database.    We always recommend that you order these very inexpensive reports from an environmental professional instead of directly from a database company, as what is really valuable is the professional advice.     

Records Search and Risk Assessment:  The Records Search and Risk Assessment (RSRA) involves the review of an environmental database and historical sources.  The report must be done by an environmental professional.  This scope of work is recognized by the Small Business Administration (SBA).

I hope this helps commercial property buyers and lenders make good decisions.