The importance of environmental due diligence in real estate transactions

As part of environmental due diligence, the environmental risks on the property are being evaluated. This allows the purchasers, owners and developers of the property to understand any potential pollution problems that may affect the value or possible uses of the site. Proper environmental due diligence helps to prevent individuals or companies from incurring heavy financial or legal risks in the event of environmental liabilities.



The environmental due diligence generally consists of a Phase 1 ESA, that assesses the property’s historical uses and potential contamination. If issues are recognised during that stage, additional assessments, such as a Phase 2 ESA, may be required to determine the extent of the contamination or existence of environmental hazards.

When stakeholders conduct environmental due diligence, they can prevent adding to their responsibilities the cost of cleaning up and potential regulatory fines for failure to deal with any contamination. Moreover, proof of environmental due diligence is often needed by lenders before a loan to acquire or develop an interest in property is approved.

This procedure also ensures the health and safety of the local area. Early identification of pollution or toxins can help avoid the damage of the future, and that is what Title 27 testing of groundwater and soil is all about-prevention and compliance.

The Bottom Line: Environmental due diligence is an integral component of the real estate due diligence process that those buying and investing in property use to accurately make informed buying decisions, prevent costly surprises, and create a plan to manage sequence- specific environmental risk related to a property.

 

To know more about Preliminary Site Investigation please visit our website: nextenvironmental.com

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