We can write hundreds of pages outlining the reasons to get a Phase I ESA. But we want to keep things short and simple so that you get the idea without running into confusions.
You must be aware of what a "Superfund" site is right? You can find numerous "Superfund" sites across the nation which can be considered utter environmental hazards. Someone is responsible for creating the mess, and someone should be responsible for the cleanup!
This only makes sense and Congress also supports the idea. So they went ahead and formulated the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) that deals with highly contaminated properties.
One main element of the act is that if you are responsible for contaminating a site, you are responsible for cleaning it up! We are oversimplifying here, and things may not be so straightforward.
For example, let's assume you purchased a property and later found out it has environmental liabilities. First of all, you made a big mistake because it means you didn't undertake a Phase I ESA before finalizing the deal. And now you are thinking who should be responsible for the cleanup?!
According to the law, you are on the hook for cleaning up the site or property. It's your mistake that you didn't go for the detailed and comprehensive investigation to uncover the current and historical uses of the property and presence of contamination- and now you have to bear the costs of cleaning it up!
That's how things are and you can't go against the law.
If you had conducted a Phase I ESA, you would have found out the environmental liabilities in the first place. Moreover, you might not have been held responsible for the cleanup. You could have got the exemption of "innocent landowner" under the CERCLA, freeing yourself from all liabilities and costs.
Surely that is what seasoned real estate investors do and we also recommend you to follow their footsteps!
A Phase I ESA is also useful for the following cases :
Generating Full Awareness
We can safely assume that any person would like to know everything about something they want to purchase. That's why we read reviews, compare products and watch countless videos to make sure everything will be as per our expectations.
An ESA helps you discover everything you need to know about the environmental liabilities of your property so that you can decide whether your investment is going in the right direction.
You can make your way towards a profitable investment when you know your risks. Phase I ESAs enable you to uncover all contamination and environmental risks and the costs for cleanup (if you are liable for it). Knowing the risks help you decide the right steps to take so that your investment can be as profitable as possible.
ESAs can also help you negotiate the price based on the nature and amount of liabilities. You can prove your costs to the seller and strike a lower price for the deal that you both could agree upon.
Transfer of Ownership
Many commercial properties are required by law to carry out a Phase I ESA for transfer of ownership. Our expert environmental professionals can help you avoid legal hassles and expenses by conducting a Phase I ESA according to ASTM standard.
Banks and other financial institutes always want to reduce their risk when it comes to providing a loan for commercial or industrial real estate properties. For this reason, many banks will not give you financing unless you have conducted a Phase I ESA by a registered environmental professional.
We can help you make a sound investment and get financing from banks by conducting a thorough Phase I ESA. Our environmental professionals have keen eyes to detect any underlying concerns or hazards that might impact your investment. We help you take the right step by empowering you with all necessary information.