A Phase I Environmental Site Assessment (ESA) is performed to determine whether environmental liability from past, current and surrounding exists on the property. It is a very important step, and is now a requirement for most lending institutions, and insurance carriers prior to a commercial real estate transaction.  It is also a good business practice to have an ESA conducted on a property to ensure against future liability.

A Preliminary Assessment (PA) is required by the New Jersey Department of Environmental Protection (NJDEP) for a person looking to protect itself against future liability. The NJDEP does not accept a Phase I ESA instead of a PA.

During a Phase I ESA/PA, the actual sampling of soil, air, groundwater, and/or building material is typically not conducted.  Standards for performing Phase I is developed by ASTM E1527-13.  Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the U.S. courts have held that a buyer, lessor, or lender may be held responsible for remediation of hazardous substance residues, even if a prior owner caused the contamination; performance of a Phase I ESA, according to the courts’ reasoning, creates a safe harbor, known as the ‘Innocent Landowner Defense’.

The federal due diligence assessment, called All Appropriate Inquiry, can be conducted by any qualified environmental professional. The state due diligence assessment, called  Diligent Inquiry, must be performed in the form of a PA. In order to satisfy both standards, ENVOCARE prepares a hybrid report that incorporates all of the federal and state due diligence requirements.

When Phase I/PA should be performed:

  • Purchase of real property by a person or entity not previously on Deed/Title
  • A lender to provide a loan subject to a real estate transaction
  • Partnership buyout or principal redistribution of ownership
  • Existing property owner’s desire to understand use of chemicals on real property and/or tenant
  • Required by a regulatory agency (US EPA, NJDEP or other state agencies)
  • Transfer or sell of properties; ISRA Transactions (PA only)
  • When contamination is claimed from offsite source impacting property an issue
  • When RAO is required from the LSRP

For more information on ENVOCARE’s Phase I ESA/PA services please e-mail