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Phase I Environmental Assessment

A Phase I Environmental Assessment (Phase I) is a comprehensive report prepared for a real estate property that identifies potential or existing environmental contamination liabilities. Phase I assessments involve a thorough review of a given property’s history, previous uses, and the surrounding area to determine if any past uses might have caused contamination.

When is a Phase I Needed?

1. Real Estate Transactions: Before purchasing, selling, or leasing a commercial property, environmental issues that could impact the property’s value or use must be definitively and expertly identified. A Phase I helps provide that clarity.

2. Refinancing or Loan Applications: Lenders may require a Phase I before approving a loan to ensure that a given property has no significant environmental issues that could affect its value as collateral.

3. Property Development: If planning to redevelop or change the use of a property, a Phase I is a key preliminary step to demonstrate that you’re not disturbing any underlying contaminants or to get necessary permits.

4. Due Diligence: If you’re an investor or a stakeholder in a property, a Phase I is an essential tool for understanding environmental risks associated with that property or establishing a point for future reference.

5. Legal and Regulatory Compliance: In certain jurisdictions, conducting a Phase I can offer legal protections. For instance, if contamination is later discovered, having done a Phase I might demonstrate that you undertook appropriate due diligence.

Why is a Phase I Important?

· Risk Management: Understand potential environmental liabilities before they become a significant problem or financial burden.

· Protecting Property Value: Identify issues that could impact property value or its future use.

· Legal Protection: Demonstrating due diligence can protect property owners and investors from potential legal actions or regulatory fines related to environmental issues.


If involved in commercial real estate - whether buying, selling, leasing, financing, or developing - a Phase I Environmental Assessment is an invaluable tool to demonstrate informed decision-making and protect your investment.


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