FAQ
All types of properties!
Environmental inspection is necessary to determine the true value of an asset. If a property has any environmental concerns, it’s value can go down drastically. Therefore, it should never be assumed that a property is fine and fit to purchase without a Phase I ESA.
1. For green land, major concerns could be soil and water contamination
2. For buildings, major concerns could be asbestos, lead paint, radon gas, etc.
3. For commercial and industrial sites, leakage/spills of chemicals, oils, salts, pesticides, paints, etc., could be major concerns
4. For properties such as gas stations and drycleaners, there is an added risk of chemicals leaching into the ground
Key takeaway – Real estate is an especially expensive investment, so always check what you are investing in. Know the true value of your asset by getting an ESA done.
A Phase I ESA is a research work, in which, various environmental databases (government - municipal, provincial and federal, or private) are searched to confirm the history and development of a particular property, and to determine the potential environmental concerns associated with it. This research is all non-intrusive, which means there is no need for any sampling from the site. It is required for transactional due diligence and financing purposes.
On the other hand, Phase II ESA is an intrusive site investigation, which becomes mandatory when Phase I ESA establishes that the site has environmental concerns associated with it. Phase II includes drilling, sampling and lab analyses of all the potentially impacted media including soil, groundwater, sediment and surface water to fully characterize the environmental condition of the site (the type, extent, degree and approximate volume of contamination). A Phase II ESA may be required for a variety of reasons including remedial planning, transactional due diligence, litigation or regulatory approvals.
The purpose of Phase I ESA is to determine actual or potential environmental concerns associated with the subject property, as well as surrounding and nearby properties. To achieve this purpose, a lot of environmental databases are reviewed and evaluated. Here it is also noteworthy that the data requirements for a Phase I ESA may vary based on objectives, geographic location and applicable governing regulations. Commonly researched databases are land titles (historical and current), aerial photographs, and many other municipal, provincial and federal databases.
As mentioned before, a lot of environmental databases are reviewed and evaluated for Phase I ESA. This needs desktop work, telephonic communication, physical visits, personal interviews and a great deal of professional judgement to accurately interpret the data. Incorrectly interpreted data can lead to serious implications for the ESA proponent as well as the other stakeholders. Many examples show that carefully conducted Phase I ESAs have saved clients millions of dollars. As per industry standards, an average Phase I ESA can cost anywhere between $3000 and $5000 based on the nature and complexity of the work.