Due Diligence Tip #10

Never assume a property’s soil and groundwater are clean because any releases that may have occurred occurred long ago and have probably “washed away.” Certain subsurface conditions either contribute to or hinder the natural attenuation of contaminant concentrations. However, it’s not at all uncommon to discover gross contamination from releases that occurred 30, 40, 50 and more years ago.  A Phase I Environmental Site Assessment is only a speculative judgment and not scientific certainty. Testing is knowing.


Due Diligence Tip #9

Contaminants do not respect property boundaries. Contaminated groundwater flow will travel according to hydrogeologic principles regardless of tax maps, metes and bounds descriptions, and fence lines. Groundwater flows from areas of recharge to discharge which often corresponds with topography. Overall, groundwater flow is quite slow and most often measured in inches (or fractions of inches) per year. Hydrogeologists call this hydraulic conductivity, or the K-value.


Due Diligence Tip #8

Evaluate how your environmental professional and consulting company manages their own potential environmental risks and liabilities. If they are unconcerned about their own liabilities, they can’t be expected to care about yours either. Be certain that your environmental professional  provides to you a Certificate of Insurance that documents professional liability coverage.


Due Diligence Tip #7

An aged lawyer once said, “If it isn’t in writing, it never happened.” Require complete documentation of all environmental inspection, testing, and remediation events. Maintaining your Phase I ESA and Phase II ESA reports will save you thousands of dollars in years to come. Request copies of environmental reports. Store the documents safely. You’ll thank yourself later.


Due Diligence Tip #6

Avoid Phase II Environmental Site Assessment and remediation cost estimates that include open-ended project cost quotations, time-and-materials quotations, and quotations without a defined start and stop date. They all spell trouble, problems, and cost overruns. Your environmental professional should have and be able to offer a reliable cost quotation before beginning any environmental project. If possible, request a “not to exceed” cost quotation that details the project scope of work and specifications.


Due Diligence Tip #5

Provide your environmental professional adequate time to perform their work thoroughly. This advice is particularly important during the Phase I Environmental Site Assessment process. Given adequate time, your environmental professional may be able to locate information that precludes the need for costly testing. There never seems to be enough time to do something right the first time, and always enough time to do it right the second time.


Due Diligence Tip #4

Be certain all Phase I Environmental Site Assessments and other environmental reports are certified to you or your business entity. If they aren’t certified to you, you cannot rely on them. We all forget sometimes to make sure this loophole is addressed during a pending transaction.


Due Diligence Tip #3

When you’re acquiring a property…think about it….who is on your side and looking out for your interests? Your lender is risking capital and looking to book a solid loan. The seller wants to sell for a profit. The broker is focused on their commission. Only you are looking out for you. Do your environmental due diligence!


Due Diligence Tip #2

Any real estate that enters your portfolio contaminated will be extraordinarily difficult to transfer out when the need arises. Invest in clean properties now and reap tremendous rewards later.


Due Diligence Tip #1

Locate and rely on an experienced environmental consultant. The cost of owning a contaminated property can be enormous and you may have to bear the entire amount yourself.