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  • Writer's pictureCommercial Property

Why An Environmental Site Assessment is so Critical?

Why An Environmental Site Assessment is so Critical?

An Environmental Site Assessment helps land buyers and lenders avoid liability for environmental problems they did not cause. In a series of decisions, the courts determined that the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) can be used to hold owners, lenders, and lessors responsible for remediation of hazardous environmental conditions, even if they did not cause the condition.

The same determination, however, provides a “safe harbor” provision called the “Innocent Landowner Defense.” This clause provides protection if the owner, lender, or lessor can show that they performed adequate due diligence prior to the purchase.

Environmental Site Assessments (ESAs) are designed to provide the protection of “safe harbor,” as well as to alert owners, lenders, and lessors to potential problems. As a result, an ASTM Standard Practice Phase I Environmental Site Assessment (also known as a Phase I ESA or simply a Phase I) is required by most commercial property lenders for purchasing and refinancing. Based on the findings of the Phase I ESA, additional Environmental Site Assessments may be required, including a Phase II and/or a Contamination Assessment


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