June 30, 2020
When is a Phase I ESA required?
As an engineering firm, we often get asked the question, “when do I need a Phase I ESA?”
We get it. If you’re not used to buying and selling commercial property, you’re probably not familiar with the ins and outs of environmental testing and the complications that go along with it.
If you’re asking for a loan to buy the property in question, you’ll most likely be told by your bank that yes, you’ll need a Phase I ESA to proceed.
However, there are often cases when you won’t need a Phase I ESA, such as if you inherit the property from someone else, or you don’t need a loan.
If you’re still asking the question, “do I really need a Phase I ESA?” before purchasing the property, then you probably don’t know why a Phase I ESA is so important.
When you buy a property, whether it’s commercial, industrial, or agricultural, you’re buying the entire property, and can be held liable for the mistakes that others have made on the property before you even bought it.
For example, if your property was farmland at any point in the past, leaky underground storage tanks (USTs) or abandoned oil wells could still be buried in the ground, invisible to the naked eye. Any associated damage and/or contamination caused by that buried UST would legally be your fault, even if you had no idea that it was on your property.
When you get a Phase I ESA, you’re not just checking a box, you’re also defending yourself from assuming the liability associated with the property. Better yet, before you invest yourself, your finances, and, in some cases, your business into a property, it’s wise to educate yourself on exactly what you’re investing in.
After all, the money that you’re spending on a Phase I ESA is much less than the remediation and legal fees that come with liability.