Commercial Property Assessment Due Diligence 101: Request a Phase 1

Posted by Evolve January 02, 2020

Surveyor Conductiong ESA Phase 1 It is in the best interest of the buyer and the tenant of a commercial property to ensure that a current ESA Phase 1 has been performed for the subject property. Environmental liability is determined by several state and federal statutes that can put the buyer and the tenant at risk if sufficient due diligence is not conducted as per CERCLA (the Comprehensive Environmental Response, Compensation and Liability Act of 1980).

Who is Liable?

Under CERCLA, the EPA or another private party may pursue a lawsuit against a current or past owner or operator of a contaminated property for costs associated with that property’s cleanup even if that owner/operator is not responsible for the existing contamination. Depending on the type of property (industrial, retail, etc…) and the duration of exposure, these costs can be extensive.

ESA Phase 1 Minimizes Future Litigation Issues

In order to defend against such future lawsuits and allegations, the buyer must conduct all appropriate inquiries (AAI) to the previous ownership and use of the property. In many instances the Phase I ESA prepared in accordance with ASTM Standard E1527-13, can satisfy this requirement. However, the buyer must request the due diligence is conducted with a property condition assessment before closing on the purchase of the property. Additionally, the Phase I must be performed by an environmental professional, is only valid for one year and contains some components that must be conducted no more than 180 days prior to purchase.

In order to limit the exposure of you or your client to environmental liability lawsuits, be sure to request the Phase I. For a full listing of the components of a Phase I Report, visit our website: