Environmental studies anyone?

Question

I'm looking at my first MHP purchase and my attorney suggested I get a Phase 1 Environmental Study done.  Is anyone doing this or have any experience with it?  Or not doing it and feel good about it?  Thanks in advance for your help.

Jeffrey H. · Answer

I have had Phase 1 and Phase 2 ESA's performed as part of diligence.  Also remember if you don't do one and close, and then you come to find out there is an environmental issue - you basically won't be able to easily unload the property without taking a loss.

The extent of monitoring and remediation is very site specific - it's difficult to broadly state "it's always expensive to remediate"  But to know how much it will cost to remediate costs a lot since a Phase 1 + Phase 2 can cost upwards of 20K or more depending on the size of the site and study area.  This is the only way to know the extent of the contamination and whether groundwater is impacted, requires long term monitoring, etc.

The common approach is this: perform a Phase 1 for $1,500 as one of your final Due Diligence activities and if it does not pass then walk away.

Matthew Arreola · Answer

if you don’t do a Phase 1 and contamination is found on your property, you could be liable for cleanup and possibly damages

Rachel H. · Answer

@Jared Lillard Yes, you should get it done despite it being pricey. The consequences could be high if you don't. Good luck!

Bill F. · Answer

@Jared Lillard They are not cheap, but depending on where you are buying, its far less costly than the alternative: paying to remediate a contaminated site.

You know which is one of the few agency's scarier than the IRS? The Federal or state EPA.

Ian C. · Answer

@James T. I'd be interested in what you've found regarding insurance, there may be insurance available but the insurer may require additional assessment before issuing the policy. Also, if your property isn't the source of the contamination I wouldn't think you'd be responsible for ongoing monitoring; however, if you'll have tenants in your building you may want to keep tabs on potential impacts like indoor air or drinking water.

Larry Schnapf · Answer

For MHP, make sure u check drinking water if onsite wells. Drinking water not part of standard phase 1.

for gas station, insurance is available to protect from offsite sources......

James T. · Answer

I'm in a similar situation.  I'm interested in a building that is near a gas station.  If it passes the phase 1 ESA, is there insurance or anything to protect me of an issue later on?  I asked a local agent about getting insurance and he said he didn't have a market for that product.  If it exists, does anyone know a company that can provide it in Georgia?  And what it would cost?  Also, do you need to do ESAs on a regular basis to monitor for future leaks?

Environmental studies anyone?

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