Environmental Due Diligence & Consulting Specialists
408-406-3850
Serving all of California and major metropolitan areas across the country
Division of Silicon Valley Environmental Group
Phase I FAQ’s
What is a Phase I Environmental Site Assessment (ESA)?
A Phase I ESA is an in-depth study of the current and historic operations on a Property as they relate to possible environmental concerns. The study includes the Property itself, and any surrounding properties that have or historically have had environmental problems that could negatively impact conditions at the Property. The purpose of the Phase I is primarily to protect the purchaser (buyer) and lender from inheriting environmental liabilities, however, it also affords liability protection to the seller. A Phase I is one of the major due diligence steps when purchasing a commercial/Industrial/Multi-Tenant property, much like a Building Inspection, Zoning Report or Land Survey.
The actual sampling of soil, air, groundwater and/or building materials are typically not conducted during a Phase I ESA. Standards for performing a Phase I have been promulgated by the US EPA and are based on ASTM in Standard E1527-13.
If Areas of Concern are found during the Phase I, and there is suspect of possible subsurface contamination, a Phase II (2) ESA may be recommended. This involves collection of soil and/or groundwater samples and testing them for the suspect Chemicals of Concern.
The staff and founders of Phase-1 Environmental Services have 35+ years experience in performing all aspects of environmental work, from simple assessments to complex remediation projects. Our philosophy is centered on facilitating the Property transaction by performing only what is needed to successfully close the sale and protect the involved parties. We pride ourselves with impeccable business ethics, honesty, and integrity.
What if I do not want to perform a Phase I on the property I am buying?
If you are self financing a property, this might be an option. But, buying a property without performing a Phase I, is like marryng a person without knowing their history. You could end up with a liability. Also…every bank/lender who loans on a commercial property generally requires a Phase I ESA as a part of the due diligence process.
Is a Phase I required by law in a real estate transaction?
No, a Phase I it is not required by law. A Phase I is meant to protect the purchaser and lender from inheriting environmental liability. Any environmental issue found can reduce the value of the land and/or generate future unnecessary expenses for the buyer. Much like other due diligence actions (building inspections etc.) a buyer can choose to accept the property “as is”, though if the property is being financed, the lender will generally not accept the same. Keep in mind, if self financing a property and you choose not to conduct a Phase I, whatever environmental issues come with a property will now be owned by you.
The bank is not requiring a Phase I for my transaction, do I still need one?
Though it is unlikely a bank would not require a Phase I, the answer is still “Yes”. A Phase I is for the buyer’s protection also.
The property is residential or vacant, so why is an environmental audit needed?
There are plenty of residential and vacant properties that were once commercial and could have environmental issues. Also, many older residential homes had heating oil tanks. Even if the residential development was built recently, it could have been farm land in the past. In the past, farms/orchards used chemicals which are toxic to humans. To assume that a property is “low risk” does not necessarily mean it actually is. Phase I’s are a simple way of taking the mystery out of the transaction, giving you the information necessary to make an educated purchase decision.
The current owner of the property never performed a Phase I, so why should I?
Don't make the same mistake the current owner did! Imagine what could happen down the road, when you decide to sell the property, and that buyer has a Phase I done and discovers problems neither you nor the previous owner did. This happens much more often than you think.
Who should order a Phase I - the buyer or the seller?
Phase I’s today are generally required by the lender and the potential buyer will be asked to order one either directly through their lender or have one ready to submit when applying for a loan. Much like other inspections, the lender will likely ask the buyer for payment in advance before contracting with the sub-contractor to conduct the study.
A little advise to people selling properties…The smart way to handle this type of study is for the seller to have the Phase I conducted before there is a buyer(s). If there are no significant issues discovered, the Phase I becomes a highly beneficial tool in the sales process. Any doubt or concern over environmental is gone. And if there are issues discovered, the seller can take steps to fix or mitigate them. Handled in this fashion, the owner is prepared rather than surprised if something comes up at the last minute. We cannot emphasize enough how impacting this can be to promoting a successful, smooth, sales transaction for all involved.
Phase I Environmental Site Assessments, Limited Environmental Transaction Screens, Preliminary Property Reports, Phase II Investigations, Phase III Environmental Remediation, Tank Removals, Service Station Construction, Environmentally Distressed Property Consulting, Environmental Re-Zoning, Regulatory Negotiations, Review of other companies Phase I or Phase II Reports, Environmental Project Planning & Management, Expert Environmental Witness, Environmental Advise, and more…
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