Phase 1 ESA

Before understanding the pre-requisites to hiring a Phase 1 ESA consultant. we must first try to understand what Phase 1 Environmental Site Assessment (ESA) means.

What Is Phase-1 ESA?

As part of a commercial real estate transaction, a Phase I Environmental Site Assessment (Phase 1 ESA or just ESA), is done to examine the present and historical usage of a specific property. The purpose of such a report is to determine whether earlier or present property usage has had an influence on the groundwater running below the property or the soil underneath, posing a risk to human health and/or the environment. If these problems are discovered, the owner and/or the lender may be held liable, and the property’s value may be compromised. 

Generally, a Phase 1 ESA is requested by real estate firms, banks, insurance companies, financial institutions, and public entities and agencies. These financiers with financial responsibilities want to make sure they don’t invest in a property that could end up needing an expensive repair or get under a state superfund list.

Private corporations and public organizations, for example, want to make sure that any property they buy is either free of contamination or that the expense of remediation may be incorporated into the sale price. All kinds of properties like agricultural land, vacant land, multi-family residential property, industrial and commercial uses, can have Phase I Environmental Site Assessment studies done. A typical Phase 1 ESA can last anywhere from 2-3 weeks.

What Does a Typical Phase-1 ESA Include?

A typical phase 1 ESA involves the following assessments:

  • A visit to the site to study the past and present conditions of an infrastructure and adjacent areas
  • A review of state, federal, local, and tribal regulatory databases, which includes Aboveground Storage Tanks (ASTs), Underground Storage Tanks (USTs), suspected or known release cases, hazardous substance storage and disposal, including products of petroleum, as well as engineering and institutional controls
  • Interviews with present and previous property owners, occupants, operators, and others who are acquainted with the property
  • Assessment of risks posed by nearby properties to the subject property
  • Examination of previous land use and licenses given in municipal or county planning files
  • Investigation of historical satellite photos of the area
  • File searches with governmental authorities with oversight over water quality and soil pollution issues

Who Is a Phase 1 ESA Consultant?

Environmental engineering consultants are usually in charge of Phase 1 reports. A majority of experts advise engaging a seasoned consulting firm. In order to protect the property buyer from potential responsibility, Phase 1 environmental studies include highly particular material and terminology.

A Phase I Environmental Site Assessment is the highest criteria for assessing a real estate asset’s environmental liability and the entire assessment or process must be handled by certified environmental professionals.

All the above-mentioned site assessment formalities will be carried out by a qualified consultant who will do thorough investigations and surveys to analyze the property. He/she will also will also visually inspect the area and document the observations in a written report. A good consultant will give you a complete and thorough assessment of the property and allow you to make practical decisions about the property.

Things to Know Before Getting Started:

To summarize, a Phase 1 assessment decreases the buyer’s liability for the property’s costly removal of hazardous substances. When purchasing a commercial or agricultural piece of property, it’s important to conduct your own research.

  • Request Estimates

The cost of a Phase 1 ESA is determined by a number of factors such as location, acreage, existing structures, the possibility of chemical storage containers or underground storage tanks, and nearby properties. For example, performing a Phase 1 assessment on a property in a less populated, rural section of the nation may cost lesser than doing so on a property located in a densely populated place. The urban structure would have a higher number of historical records and nearby properties to analyze. Furthermore, there are higher chances that a city property might have been rented out to a variety of businesses.

  • Stay Alert about Cheaply Priced Deals

If you happen to come across a quote that cheaper by a few hundred dollars than most of the standard pricing in the market, you should be cautious about such cheap deals. Remember that cheap price in no way means quality service. Performing a thorough Phase 1 ESA requires significant experience, research and time. It the consultant says that he can give you a complete report for just 200 dollars, there are chances that he is cutting corners or not doing a thorough investigation. This could make you liable for an expensive remediation shortly down the lane.

  • Inquire about Insurance Coverage

Your environmental consultant should have professional, pollution, and commercial liability insurance. This safeguards the consultant as well as his clients.

  • Ensure You Choose an Experienced Environmental Consultant

Inquire about references or sample Phase 1 reports. A consultant, who is not honest, could advocate a Phase II when it isn’t required, just to earn some extra money. Avoid such a situation by understanding the need for Phase 1 Environmental Site Assessment.

Now that you have access to more details about Phase-1 ESA, you are good to go ahead and hire the right consultant for property assessment.