Understanding Environmental Services
If you’re looking to buy or refinance a specific piece of property, you’re going to have to consider many things. In addition to the process of buying, you’ll have to consider Phase 1 and Phase 2 Environmental Site Assessments (ESA) and the help of an environmental company
These assessments can prevent consumers from making a bad investment. Unfortunately, many people don’t consider the ESA until late in the process of buying or doing a refi. This can wind up costing them a small fortune and delaying the process of the purchase.
Once people recognize that they need to have the Phase 1 and Phase 2 ESA completed, the next question that they generally ask is “How much is the environmental assessment going to cost”?
Here is a brief explanation of each phase and the fees that may be associated with the process.
Phase 1 ESA Potential Costs
Phase 1 is the first search that is done on the property. This will involve an environmental assessment of the property by a qualified environmental consultant.
The fees for this portion of the research will vary from $1800 to $6500. It will begin with a visual assessment of the piece of property. Since property sizes vary, so will the required fee. The fee will also include any travel expenses to the property should the researcher have to travel any great distance in the United States.
The researcher will begin with a visual inspection of the property and any buildings on the property. Is there asbestos in the buildings? Is there lead paint in or on the buildings? In older pieces of property, this is a concern. All of this information will be documented and compiled into a report. However, there are many other concerns as well. The researcher will have to find out who owned the property previously and whether or not the property was used commercially or residential.
- What was the property used for?
- Was it an environmental hazard?
- Will soil, ground water, and air be required to be tested as well as paint on or in buildings and checking for asbestos?
The more questions that must be answered, the longer and more costly the research is going to be. If the report is needed in a hurry, it may also have to cost more as the test results must be expedited.
What Happens If There Are Environmental Hazards?
Environmental hazards such as a former filling stations underground storage tank may greatly impact the piece of property. The researcher will want to explore this to a degree and see if the underground storage tank was removed.
Often, this information isn’t readily available. In such cases, more information will be required and the property will move to a Phase 2 ESA. If, however, the person is paying in cash and doesn’t particularly care regarding the environmental hazard, they may proceed as long as they sign various waivers.
However, if a bank is involved or there is any financing involved, then the property will move to the Phase 2 ESA.
Phase 2 ESA Potential Costs
During the Phase 2 ESA, the potential costs will range from $1000 to $100,000. Again, there are many variables including the size of the property and the information that must be gathered.
Let’s go back to our example of an underground storage tank. In many cases, the previous owner would simply fill it in. In such cases, the tank must be located and removed. This will all take time and money.
If the tank was removed per the statement of the previous owner, however, there is no documentation, this can create even more paperwork.
- When was it removed?
- What did it cost?
- Who removed it?
Clearly, it can be a very detailed process. Soil testing, as well as underground water and air testing, must all be done again. The property must be fully explored in an effort to locate the original site of the underground tank and it must be checked to see if the tank is still on the ground or if there is evidence that it has been removed.
All of this is going to require time and money and manpower. It’s simply not an easy task. The REC or recognized environmental condition will be challenging to track down. It may be well documented or it may be simply documented by word of mouth.
Other factors that may worsen the situation are that if the property was left vacant for a time it may have been used for illegal dumping. This may mean that there are contaminants such as corrosives or radioactive contaminants. All of this would be revealed in soil and groundwater testing.
The property may require extensive cleanup if this is the case. Often you’ll wind up with legal fees as you may have to hire an attorney and you may also have to involve the government depending on all of the information that is revealed.
The EPA (Environmental Protection Agency) may also become involved. It can quickly become a nightmare. You’ll want to make sure that you hire a great professional to do all of your Phase 1 and Phase 2 ESA. In these cases, the least expensive isn’t always the best route to go.
You want accurate information that is compiled and has a strong paper trail, even if the paper trail has to start with your owning the property. The examination of the previous use of the property and the previous owners is tantamount to a solid report that will stand up in court should you ever have to prove that such contaminants were dealt with in proper manner.
All of these reports will cost money and take time. If you’re in a hurry, the expediting of such reports will come with a price as well. Be sure that you’re a professional team is thorough in their research. If anything is discovered later it can have a huge impact on the property and delay the sale.
Unfortunately, there is no simple answer to the total fees for such processes as using the environmental services to research a property. Each individual case will vary depending on the variables.