3 Reasons Why Phase 1 Environmental Site Assessments Are Important

by | Jul 6, 2021 | Inspections

When buying a commercial property, it is imperative to ensure you have done proper research and due diligence on the property. It is never a bad idea to get into the real estate market, but it is good to keep in mind that buying a commercial property comes with its risks and rewards!

A significant risk is directly related to the environmental factors of the property.

One way to become fully aware of the environmental factors is to learn more about the location and property around it, the overall value of the property, and the building’s structural integrity. To do this, you must get a Phase 1 Environmental Assessment or also know as a Phase 1 ESA report, done on the building.

What is a Phase 1 ESA Report?

A phase 1 ESA report is performed by an environmental consultant whose job is to help identify potential contamination, analyze background documents and records, schedule interviews with current employees, property owners, occupants, certain government officials and any other people who are familiar with the property. Check out our Phase 1 ESA report page for a complete list of services performed.

The report’s primary purpose is to gain access to see if previous and current property purposes have threatened human health or have contaminated the soil or groundwater under the property.

Once the assessment is complete, the environmental professional will give you a thorough summary of any concerns that came up during the evaluation and will make any recommendations about any actions that need to be taken.Female construction engineers with helmet walking through the construction site and making plans for their project.

What happens if you don’t perform a Phase 1 ESA Assessment?

If you decide to buy a commercial property without a Phase 1 ESA report, you may be saving yourself a couple of hundred dollars now, but it could cost you even more in the long run. For example, if you look to refinance your property a couple of years after purchase, you will be required to show a Phase 1 ESA report. If that report comes back with contamination issues, you will be required to pay the costs to fix it. If you had known these problems existed when buying the property, you might not have purchased it.

These costs come with a high price tag. You could find yourself paying up to $100,000 for the remediation costs. When purchasing property, it is always better to be safe than sorry because sorry can be very pricey.

We want to ensure you are taken care of when purchasing a commercial property. We understand the potential for returns on this type of property when things go according to plan. In an everchanging real estate market, the risk for natural disasters and tenant occupancy is a higher amount of risk that could alter the success of your purchase.

Here are three reasons why you should always get a Phase 1 ESA report when buying a commercial property: Exterior shot of commercial building during sun set.

1. Liability

Suppose you purchase a commercial property and you find out there is contamination on-site. In that case, if you have proof that you performed a Phase 1 ESA report that shows you took steps to demonstrate your due diligence, then the owner would now be protected from the environmental liability.

If, after purchasing the land, it is revealed that there is contamination, having appropriately carried out a Phase 1 ESA before the purchase will act as proof of due diligence, which can protect the owner from any liabilities.

2. Reduce the risk on your business

If it is found that your new property has contamination issues, authorities will immediately shut down your property until the contamination issue is resolved. This means any business on your property must cease, and it cannot be leased out as well. Doing a Phase 1 ESA before purchase will reveal any contamination issues and reduce your risk of shutting down property.

3. Problems when selling

Suppose you are trying to sell your property and you didn’t perform a Phase 1 ESA report, and the new purchaser comes across contamination problems. In that case, you would be responsible for covering the costs of remediation.

Phase 1 ESA Environmental Engineering Firm

Our engineers are experienced professionals that will ensure your property is safe to help you make a suitable real estate investment.

Contact us today to schedule a Phase 1 ESA report.

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