Phase 1 ESA Report

Phase 1 ESA Report

Phase 1 Study:
A Phase 1 ESA is a comprehensive review of the environmental risks past, present and future with regard to a commercial property. They are typically done during a change in ownership of commercial property. Buyers, sellers or banks commission them. Ultimately, reasons to perform an environmental site assessment are to protect the value of the collateral for a loan for the buyer and lender. Environmental issues can be very expensive. It is not impossible for a property value to become negative due to environmental impacts from previous owners or neighboring businesses. The bank doesn't want to lend on a property it might get back in a foreclosure. They really don't want a property they can't resell without mitigating the environmental liability.

If a property is purchased without a Phase 1 ESA, the liability of the environmental impact is transferred to the new owner. When a bank takes back a property through foreclosure they'll inherit the environmental liability too. So banks often won't take possession of their own commercial foreclosures without a Phase 1 ESA.