A Phase I Environmental Site Assessment (Phase I ESA) conducted in accordance with the American Society for Testing and Materials (ASTM) standard practice for environmental site assessments (Designation: E 1527-05) is the nationwide due diligence standard to be followed when a prospective buyer is considering the purchase of a commercial or industrial property. In New Jersey, a Phase I ESA that conforms to the preliminary assessment (PA) requirements, pursuant to the Technical Requirements for Site Remediation; NJAC 7:26E-1.1 et seq, is the standard for due diligence that provides a prospective buyer New Jersey "innocent purchaser" protection.
A typical Phase I ESA costs between $2,500 and $3,000 for a three to four week turnaround, and is required by most lending institutions prior to the approval of a commercial or industrial property loan. Often overlooked are less expensive and more expeditiousdue diligence alternatives that can be utilized in cases in which lender approval does not have to be satisfied or when a prospective buyer is in the preliminary stages of investigating a property for purchase.
A less expensive and faster alternative to a Phase I ESA is a Transaction Screen, which is performed in accordance with ASTM E1528-06, "Standard Practice for Limited Environmental Due Diligence: Process." A Transaction Screen is suitable for property transactions in which no lender is involved and the prospective buyer would like to perform limited due diligence to ensure that they have some understanding of environmental conditions at the property prior to finalizing the purchase of a property. A Transaction Screen can also be utilized when a new lease or refinancing is being pursued. Some condominium operators, such as parking garage tenants, rely on a Transaction Screen for their property due diligence prior to signing a lease. A typical Transaction Screen can be completed in two weeks and costs less than $1,000.
Another popular alternative to a comprehensive Phase I ESA is a search of the environmental databases that are used to prepare a Phase I ESA. Database searches are often utilized by prospective buyers that are in the early stages of due diligence. They provide a limited but useful amount of information about the environmental condition of a property under consideration and the area surrounding the property. A typical search of the environmental databases can be completed in as little as one week, and costs $700 for the database searches and a review letter prepared by EWMA that provides our professional review of the findings. This option can be customized to suit a client's due diligence needs, including a site visit and/or file review to gain a greater understanding of a property under consideration for purchase. The information obtained during the preliminary due diligence efforts can be included in a Phase I ESA, should one be necessary at a future point during the property purchase transaction.
Mr. Coviello is with EWMA's Headquarters Office in Parsippany, NJ. He is the Technical Proposal Writer and Sales & Marketing Associate. For information about which option is best for you please contact Mr. Coviello at (973) 560-1400 ext. 184 or John.Coviello@ewma.com.
