Phase I Environmental Site Assessments

Additional Information

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.

  • Buyers benefit by knowing if previous owners have contaminated the property.  Buyers can the request a pre-purchase cleanup or negotiate a lower purchase price.
  • An ESA can provide the real estate owner with documentation of a property's condition to increase salability.  
  • Lenders utilize an ESA to determine the financial liability of loaning money or foreclosing on a property which has been environmentally damaged.
  • Lessors can use an ESA to establish a property's baseline environmental condition.  When tenants change or activities warrant, a subsequent assessment can be used to determine the tenant's liability.
  • Lessees and developers can use an ESA to determine if they should buy, build on or lease a property.

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.