Environmental site assessments: get a good attorney, too.

• Author: Studer, Stephen A.

The importance of good site assessment by a quality environmental concern cannot be underestimated. Given that such an assessment can be obtained for $1,200 to $2,000, it should be one of the most economically justifiable costs in any commercial real-estate transaction.

The property buyer's potential liability for cleanup costs run to the tens or hundreds of thousands of dollars and even more. Because of that potential liability, even if the buyer decides against having a site assessment performed, a lender will almost certainly insist on one being completed prior to making a loan on the property.

There are generally two questions raised. First, should a site assessment be performed and, secondly, who should perform it? The answer to the first is fairly simple. If it is commercial real estate property, get a Phase I Environmental Site Assessment. An environmental lawyer can be helpful in defining the scope of the work to be performed in an effort to control expenses, since different types of properties demand different levels of examination. The first step recommended, however is to retain an environmental consultant who is a member of the National Registry of Environmental Professionals and one who adheres to the standards published by ASTM for Phase I Environmental Site Assessments. There clearly are firms in whose opinions one should not put much faith. I have seen a two-page site assessment declaring property used for more than 100 years as industrial property as being "clean." A second assessment found substantial evidence to the contrary.

A good environmental consultant will prepare a detailed report covering previous use of the property and nearby properties and will search for evidence pertaining to soil or groundwater contamination. The consultant also will perform cursory checks for asbestos and PCBs. Discovery of any of these "red flags" usually indicates the need to have a Phase II Environmental Site Assessment performed.

More often than not in commercial real-estate transactions, some evidence of possible contamination will be discovered during the Phase I Environmental Site Assessment. The purpose of the Phase II Environmental Site Assessment is to confirm or deny the existence of a potential liability and determine, if possible, the magnitude of the problem. The primary difference, besides cost, is that physical tests, such as the taking of soil...