Phase 1 Environmental Site Assessmen report for a hard money loan

[Hament Raju Mahajan]

I am doing a private loan secured by a mixed use property (smoke shop on 1st floor and residential units on top floor) on Oakland CA.  I am doing this as a bridge loan and the the borrower is planning to take a regular  (or hard money ) loan on it to pay me off.   DUe to time constraints we do not have time to do a Phase 1 ESA (which conventional lenders look for .   If i do this loan without phase 1 ESA report what risk i am exposing myself as a lender? If there is an environmental fining when the Phase 1 is conducted ..are there remedies for that too  and how expensive could they get  as a worst case scenario ?

[Chris Mason]

Commercial financing isn't my thing so I've never been involved with an ESA, but FYI businesses involved in pot have a hard time with access to financial services from federally regulated institutions. It's a huge problem with our (wait for it...) budding pot industry in California. I wouldn't necessarily assume they will be able to refi out of your HML even if the Phase 1 ESA comes back spotless, until you have done that homework as well (unless you have already done it).