Corfac News

Due diligence is something that every commercial real estate broker has to worry about, and it can be confusing if you don’t understand the terms and know what reports are required.  All brokers need to understand the risk associated with any give property before they complete the sale to best serve their clients.  Depending on who the lender is, different due diligence reports are required.

Partner Engineering and Science led a webinar earlier today explaining the basics of due diligence, including environmental, engineering, surveys, and more. A Phase I Environmental Site Assessment evaluates the environmental liability associated with a real estate asset. This assessment includes:

• Onsite reconnaissance
• Historical records
• Government records
• Other sources, including interviews

If a lender doesn’t require a full Phase I, the portions can be completed ala carte.  If the assessment turns up a recognized environmental condition, further assessments might be needed.   Once a Phase II is completed, including testing of soil, groundwater, and soil vapor, you will know what kind of problem is present. Potential owners can then establish the extent of the issue and what remediation is needed for the clean up.

A couple of things to keep in mind when you order an environmental report:

• The assessments take time!  Phase I is around 15 days and Phase II is 3-5 weeks.
• Cost varies.  Phase I is around $1800-2500 and Phase II cost is based on sample needs, number of samples, and depth.
• Make sure you define the asset, provide previous reports, and identify the scope in advance so you know exactly what you’re getting.

More information on Phase I assessments is available on the Partner ESI website: http://www.partneresi.com/services/phase-i-environmental-site-assessment-report.php.