Why You Need an Environmental Attorney to Review Your Phase I Environmental Site Assessment
Whether you’re representing a company purchasing a property for business use, or part of a commercial agency investing in a piece of land, a Phase I Environmental Site Assessment is in your future. This phase of the real estate purchase is not something that can be avoided. Yet I’ve seen many clients approach it in a way that can cause serious liability and damages in the long run. Let’s look at what a Phase I Environmental Site Assessment is and how you can make sure you’re protected in the process of purchasing real estate.
An environmental site assessment (ESA) is a report prepared for a real estate property that identifies potential or existing environmental contamination issues and liabilities. The report addresses the underlying land, as well as physical structures of the property.
The preparation of this initial report is typically referred to as the Phase I ESA and is part of the due diligence process when a property is being considered for purchase by commercial entities, as well as individuals purchasing property for non-residential use. Additionally, the Phase I report becomes an important component of the purchase process and is used by the lender to determine financing.
When a Phase I ESA prepared, it is critical that all elements of the “all appropriate inquiries” are conducted as part of the property assessment. If the “all appropriate inquires” are not addressed, the new property owner may not receive innocent purchaser or bona fide prospective purchaser status under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). This means the purchaser may be liable for environmental contamination and damages they did not cause.
Consulting with an environmental attorney when you first start the process of purchasing a property is the best way to avoid potentially huge liabilities later in the process. An environmental attorney knows the how to read a Phase I ESA report and how to make sure it’s compliant with CERCLA’s “all appropriate inquiries.” An experienced environmental lawyer also knows which questions to ask the consultant performing the assessment and can address issues before they become a liability.
If you find yourself in a situation where you are purchasing commercial property and the Phase I ESA is in your future, your first step should be contacting an experienced environmental lawyer. Protecting your company and its financial future is critical. Do not wait until after the assessment has been completed before speaking with an attorney.
Elidia C. Dostal is a partner and environmental, land use, and business attorney at Vanst Law. She serves business clients who understand the importance of involving an attorney at the front end of business transactions and compliance issues to avoid the high cost of litigation or regulatory fines. Elidia brings an expert understanding of the importance of thinking ahead to avoid potential future liabilities.