Phase 1 & 2 Environmental & Baseline Environmental (BEA)
Environmental studies are an important tool to protect a buyer from the liability and cost to remediate undisclosed or unseen or unknown environmental contamination. The first step is for a buyer to state in the purchase agreement that the purchase is contingent on the buyer obtaining a Phase I study that is satisfactory to the buyer.
Phase I Environmental Site Assessment or ESA
A Phase 1 study is the first step to determine whether prior owners of the property or adjacent properties have engaged in a type of business that is sometimes associated with soil or water contamination. A Phase I study covers an investigation of the current and past history and uses of the property in question. What was previously on the site? What could past usage have done? Did any usage contaminate the soil or groundwater underlying the site? How about the current operation? Are any petroleum, hazardous materials or chemicals in use at the site, or have they been released to the air, soil or groundwater at or near the site?
Banks will almost always require a Phase I study on property that they intent to make a loan on. But even if you are a cash buyer, unless you have intimate and long-term knowledge of a property’s history, a Phase I study is generally necessary to protect your interests from adverse liability claims.
There is normally no sampling or testing during a Phase I. It’s an investigation to determine if there are any conditions that are indicative of releases of petroleum or hazardous materials or chemicals at the site, now or in the past. These conditions are collectively known as “REC” or recognized environmental conditions. So really, a Phase I is meant to identify REC at the subject property, either at present or which may have been present in the past.