Due diligence, when it comes to commercial real estate transactions or refinancing, is essential before closing any deal.
Oftentimes, when a bank or lender is involved in the process, they will require a Phase I Environmental Site Assessment (“ESA”) from an approved environmental firm, such as Venture Engineering, as one aspect of the buyers’ or sellers’ due diligence process.
Although it is important to capture and validate precisely what your specific lender requires, as well as what their timeline is, here are some reasons as to why this step in the transaction is valuable:
- By undertaking and completing one’s due diligence early in the real estate acquisition process, a potential buyer can save time and money in the long run.
- Knowing the issues or risk exposure sooner, rather than later, can provide a more informed basis for short and long-term planning.
- From the lender’s perspective, having a Phase I ESA can help evaluate their risk exposure related to the projects they finance.
Take the proactive step when it comes to purchasing or refinancing a commercial property, and discuss the Phase I ESA requirement with your lender as early in the financing process as possible.