Real Estate Due Diligence - Phase I / Phase II

Real Estate Due Diligence - Phase I / Phase II

A Phase I Environmental Site Assessment (ESA) provides a planning tool which enables investors, lenders, brokers and attorneys to assess commercial real estate. 

Reasons for conducting a Phase I ESA may include:

  • Many lending institutions and the Small Business Association (SBA) require an environmental site assessment prior to approving financing or refinancing.  
  • Phase I ESAs are conducted utilizing a standard practice governed by ASTM (ASTM E 1527).
  • Phase I ESAs are the industry standard.
  • Phase I ESAs are the only method regarded as meeting due diligence requirements for a landowner liability defense if seeking protection under the Comprehensive Environmental Resource Liability Act (CERCLA).
  • Determining whether any immediate actions at the subject property are necessary to comply with existing environmental laws and regulations.
  • Assistance in evaluating the legal and financial liabilities associated with the subject property.
  • Assistance in evaluating the subject property’s overall development potential.
  • Complying with the US EPA rule of All Appropriate Inquiry (AAI).

All of Seneca’s ESAs include the four main components of a Phase I ESA as set forth in the most current ASTM E 1527. Assessments include:

  • Records reviews, such as governmental databases, historical photographs and maps.
  • Site reconnaissance to visually identify potential risks.
  • Interviews with past and present owners, operators, occupants, as well as governmental officials.
  • Fully inclusive report.

Examples of potential risks that may be identified either through document research, visual observation or interviews include: 

  • Underground or aboveground storage tanks and associated piping systems.
  • Evidence of current or historical dry cleaning activities.
  • Improper handling or storage of hazardous materials.
  • Evidence of a spill, or release of hazardous materials (no secondary containment for tanks or barrels, stained surfaces, stressed or dead vegetation, etc.) and accumulated refuse or abandoned landfills.

Seneca can also make recommendations for conducting Phase II environmental site assessments (ASTM E1903) based on the conclusions of the initial Phase I ESA. Phase II ESAs are carefully and prudently tailored, using state-of-the-art engineering techniques and procedures to address the specific findings discovered during the Phase I.

If the conditions identified during the Phase I ESA are confirmed at unacceptable levels during the Phase II ESA, Seneca can work with regulators and responsible parties to provide solutions. These solutions range from:

  • Traditional removal and disposal methodologies.
  • Venting.
  • Bioremediation.
  • Other in-place treatment techniques. 

The scope of the remediation plan is determined based on individual client needs, available on-site resources and specific site conditions.

Learn more about landowner liability protections at https://www.epa.gov/enforcement/landowner-liability-protections.

 

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Due Diligence Flyer

Due Diligence Infographic