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Real Estate Environmental Issues

Real Estate Environmental Issues

This is a snippet from our Environmental Issues course, available in several states for continuing education credits.

If you are buying a facility (commercial or industrial property) you must find out what contamination may be there. Facilities could include factories, gas stations, mirror plants, dry cleaning establishment, or farms. There are three phases of this process.

Phase I. This is a preliminary report that investigates the history of the subject and neighborhood. Inquiries are made regarding owner/operator, governmental and agency documents, and records. A chain of title search is generally performed.

  • The Securities and Exchange Commission requires registered companies to disclose material information that a reasonable investor would believe significant.

  • The Department of Transportation requires that all hazardous material must be reported and all hazardous spills are recorded.

  • The Army Corps of Engineers issue dredge and fill permits and conduct inspections.

Surveys, site plans, and aerial photos can show the location of storage tanks, ponds, transformers, vehicle maintenance areas and topographical features.

Phase II.  This involves actual site testing, including monitoring of wells, soil probes, and their analyses. A Phase II investigation is undertaken if the Phase I investigation finds evidence of possible surface or subsurface contamination, AND/OR past or present violations of environmental laws and regulations. It is during this time that the presence or absence of contamination can be confirmed. Investigators can also identify the types and amounts of hazardous substances present, identify locations, and estimate the rate of migration. Soil and groundwater testing can be done as well.

Phase III.  This phase includes an engineering study of the means of correction (remediation) for the site, including estimates of the costs and time involved. It more precisely determines the degree and extent of contamination (including groundwater contamination) and determines the type of clean-up or control techniques that are appropriate. Note that the recommended cleanup/control techniques must be approved by the appropriate regulatory agency.


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