When parties are considering the purchase, lease or refinance of a commercial property, one area of priority should be conducting environmental due diligence. Prior to the purchase or occupancy of a property, the purchaser or future tenant has the option to complete due diligence to verify the current and historical uses of that property. Properly conducting environmental due diligence can consist of satisfying various requirements depending on the type of acquisition and the level of environmental risk inherent to the property. The process of obtaining information to satisfy requirements can include:
- environmental questionnaires
- transaction screens
- internal environmental screens
- phase I environmental site assessments and
- phase II environmental site assessments
All Appropriate Inquiry
The formal process of evaluating properties for the presence or potential presence of environmental contamination is known as the All Appropriate Inquiry (AAI.) By evaluating the current and historical uses of the property in question, the identification of recognized environmental conditions (RECs) and historical recognized environmental conditions (HRECs) can be made.
An AAI is obtained by completing a phase I environmental site assessment. A phase I assessment is the first step in documenting how a property may have become contaminated. Depending on the results of the phase 1 assessment, the environmental due diligence of the property may or may not need to move to a phase II ESA. Ultimately, the results of the phase II ESA assessment will provide a determination as to whether or not contaminants are present at a level that would require environmental cleanup.
When investing in a commercial property or taking lease of one, a purchaser or tenant needs to not only protect themselves from unidentified environmental liability stemming from the property, but to also be aware of what their potential obligations may be in terms of due care obligations. Due care obligations may limit use and modification to the property depending on the type of contamination present. Some states do offer liability protection for purchasers and tenants if the contamination is documented prior to their purchase.
In situations wherein contamination is present and liability protection is not available, there are several other options, including:
- applying for local, state, or federal Brownfield funding for environmental cleanup
- negotiating with the seller for cleanup expenses/price reduction
- withdrawal of the intent to purchase agreement
New Jersey Environmental Lawyers at Michelman & Bricker, P.C. Represent Clients Requiring Environmental Due Diligence
Knowledgeable and savvy New Jersey environmental lawyers at Michelman & Bricker, P.C., provide legal counsel to buyers, sellers and leasors of potentially contaminated Pennsylvania properties. Our team of experienced attorneys provide counsel on how to best navigate your real estate transaction based on the environmental assessment. Many banks require that environmental due diligence be completed before they will approve commercial loans. Do not delay in reviewing your potential property investment with our environmental lawyers in New Jersey at Michelman & Bricker, P.C. by calling 215-557-9440 or submitting our online form to schedule your initial consultation.
Our offices are located in Cherry Hill, New Jersey and Philadelphia, Pennsylvania allowing us to serve clients in Philadelphia, Cherry Hill, Camden County and Harrisburg, Pennsylvania.