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What Is a Phase 1 Environmental Assessment?

A Phase 1 Environmental Site Assessment identifies potential contamination on a property before purchase or development. It's required by most lenders for commercial transactions and protects buyers from environmental liability.

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What it investigates

The assessor reviews historical records (aerial photos, fire insurance maps, city directories), regulatory databases (leaking underground tanks, hazardous waste sites), and conducts a site visit. They're looking for Recognized Environmental Conditions (RECs) — past or present activities that could have contaminated soil or groundwater.

When it's required

Commercial real estate lenders almost universally require a Phase 1 before funding. It's also standard practice for any commercial property purchase. The assessment must meet ASTM E1527 standards to qualify for the innocent landowner defense under federal law (CERCLA).

What happens if it finds problems

If RECs are identified, the next step is a Phase 2 investigation — actual soil and groundwater sampling to determine if contamination exists and at what levels. Phase 2 costs $5,000-$25,000. If contamination is confirmed, remediation costs can range from tens of thousands to millions. This is why you do the Phase 1 before closing, not after.

The bottom line

Phase 1 assessments identify contamination risk before you buy. Required by lenders, they protect against inheriting million-dollar cleanup liability.

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