An Environmental Site Assessment (ESA) is the tool used to determine the environmental condition of a parcel of real estate. An ESA is usually completed in phases, but the majority of ESAs do not progress beyond Phase I. A Phase I ESA identifies potential environmental problems at a particular site. Phase II of the ESAs defines and characterizes identified problems, while Phase III mitigates or cleans up any identified contamination.
Buyers, sellers, lenders, lessors, lessees, and developers benefit from an ESA by knowing if environmental risks, either financial or legal, are associated with a property transaction.
The Comprehensive Environmental Response and Cleanup Liability Act (CERCLA) firmly assigns liability associated with hazardous material releases in the environment. The Superfund Amendments Reauthorization Act (SARA) broadened potential financial liability for environmental cleanup to current and former owners, managers and controllers of a property. This liability also extends to owners, operators and legal entities holding title to the property regardless of whether such ownership was transferred through bankruptcy, foreclosure, abandonment, or payment of delinquent taxes. You can be protected under SARA if you conduct a pre-purchase assessment and can show that you did not know about contamination.