Environmental Due Diligence – Due it Right the First Time

John Russell By: John Russell

The completion of ASTM E 1527-13 due diligence requirements in property acquisition is a critical issue that is widely underrated and often overlooked in property development.  Evaluating the environmental condition of a property is an important factor in understanding the limitations that could inhibit construction; however, many times, I have received requests to complete a Phase I Environmental Site Assessment after conceptual site plans have already been prepared.  In fact, on occasion, I sometimes receive the conceptual details with the deed or title search information as part of the background documentation.  Or even worse, I can think of one occasion where the construction schedule had already been set (talk about putting the cart before the horse!).

Yes, no one likes to hear bad news and, trust me, environmental consultants don’t gain any great joy conveying it either.  Yet while Phase I Environmental Site Assessments are necessary, they are not evil.  Evaluating and recognizing the presence of the environmental conditions that have impacted, or have the potential to impact, your property of choice is a critical issue that plays into both your lender’s liability as the financier and your future liability as the property owner.  Therefore, one of the first professionals you should contact after conjuring the idea of how great your building would look at that downtown intersection is an environmental consultant – and the sooner the better.  For if issues are identified, a certain time element will be required to quantify the risks and negotiate the regulatory waters: however, rest assured that those of us who have been in this business for any substantial length of time can steer you safely through the rocks.

Always remember that there is a logical stepwise approach to this business that is intended to protect the interests of all parties concerned before too much money is dropped into the deal, and whenever you start haphazardly pursuing the elements of a project out of order (e.g., by delaying the completion of the required due diligence) you run the risk of wasting time and money, both of which could be spent better elsewhere.