Transactional Support and Due Diligence
BCA’s Real Estate Transaction Team has over a century of combined experience supporting buyers and sellers to meet due diligence requirements for real estate transactions. Because property owner liabilities are at stake, it is critical to consult with an environmental professional knowledgeable in all aspects of environmental liabilities during property transactions.
The Phase I ESA is an assessment of a site which identifies readily observable and historical environmental conditions resulting from past and/or current operations on or near the subject property, which could present a liability for the property owner, tenant, operator, or buyer under current environmental regulations. All ESAs should be performed in accordance with the most recent ASTM standard for Phase I ESAs and the All-Appropriate Inquiry (AAI) rule, providing information necessary to support property transfer and demonstrate “All Appropriate Inquiry”, status as a “bona fide prospective purchaser” (BFPP) and good faith in establishing defense against claims under the Comprehensive Environmental Response Compensation Liability Act (CERCLA) should such a defense be required in the future. In addition, recommendations may be provided to the client with respect to identified potential environmental liabilities on or associated with the properties.
Most lenders require a Phase I ESA before they finance a commercial/industrial property purchase. Performing environmental due diligence that is compliant with regulatory guidelines will provide buyer protection from liabilities under federal and state laws and prevent buyers from making costly mistakes the could derail future business plans.
For some properties, a lender may request a Phase II Environmental Site Assessment. This type of assessment is typically performed when Phase I results indicate potential contamination risks. It involves collecting environmental samples and conducting laboratory tests on the samples collected to identify potential sources of contamination.
Due diligence is an essential step in commercial property transactions, limiting buyers’ liability and giving them a clear understanding of the conditions of the property being acquired.