Many who have borrowed money for commercial real estate have been informed by the bank that a “Phase I” will be required prior to closing. Often the bankers request is the buyer’s first acquaintance with this investigation that seeks to identify certain environmental legal risks.
As is typical with technical specialties, Environmental Site Assessments are laden with lingo. In the lingo of the Phase I, the objective is to identify a “recognized environmental condition”. By definition, that is “the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property: due to a release to the environment; under conditions indicative of a release to the environment; or under conditions that pose a material threat of a future release to the environment”. We note that a Phase I is a research and inspection exercise and includes no sampling of any kind. Should the Phase I identify a Recognized Environmental Condition, a Phase II investigation would be necessary to confirm or refute actual contamination on the property. Biome Consulting Group has decades of experience in the conduct of Environmental Site Assessments and provides superior guidance on due diligence issues.