Elevated or excessive indoor carbon dioxide (CO2) levels in a home, school, or office building can be hazardous.   Humans produce and exhale carbon dioxide (CO2) as part of normal metabolic processes so occupancy of an indoor space will increase CO2 levels naturally.  The CO2 build-up in a built environment such as a building, when humans occupy said space can be detrimental to human health.   A common byproduct of elevated CO2 levels in humans is a feeling of tiredness, lack of focus, decreased cognitive skills, and even a sick or nausea feeling. Many people will typically feel this way after a large meal, but the timing of these systems and meals can rule out a full stomach and point to an indoor air quality issue.  In short, elevated CO2 levels are not a health benefit. 

What are acceptable CO2 levels?

CO2 levels will vary from outdoor to indoor, the rub is what is considered a high CO2 level.

In a perfect world indoor CO2 levels will be comparable to exterior levels.

Public Employees Occupational Safety and Health (PEOSH) standards or the American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE) standards both use a standard of below 1,000 parts per million (ppm) as a guideline for acceptable indoor air quality in buildings.

Many professionals evaluating indoor air quality relative to CO2 utilize the 1000 ppm standard. For comparison, an outdoor typical CO2 level will be around 400 to 500 ppm.

That said an indoor CO2 level of 700 and 800 ppm are baselines commonly used as markers for good indoor air quality.   Not unlike mold indoor air quality evaluations, you do not want indoor levels to be excessively above outdoor air quality standards. For mold, it is common to flag an indoor issue if spores are 10% higher inside as compared to outdoor levels.   Regarding CO2 excessive indoor levels have a higher variance.

What is considered a Safe CO2 Level Indoors?

Safe, Organic and New & Improved have varying meanings and interpretations.   Safe CO2 levels can mean “best”, “not good”, “bad” or “potentially harmful.” Since we as humans manufacture CO2, levels can spike in a crowded room.

Best Indoor CO2 Levels: The best CO2 levels indoors are levels that match outdoor levels. Using 400 ppm as an outdoor baseline, levels at 400 would be considered best. Now we recently tested outdoor CO2 levels and came up with 500 ppm and used that number for indoor comparison.   The point being levels can vary from acceptable averages.  The industry using the 400 ppm (outdoor CO2 concentration) level, sets a threshold of CO2 being no more than 700 ppm above outdoor air.  This bumps the 1000 ppm standard to 1,100 or 1200 ppm with a 500 ppm outside level.

Good CO2 Indoor Air Quality: CO2 levels below 800 ppm.

Acceptable C02 Levels: CO2 levels below 1,000 ppm are generally considered acceptable for most indoor environments.

How do I know if I have a CO2 problem? Have an indoor air quality assessment performed.

Our office fields many calls about indoor air quality and well over 75% of the complaints come from suspect mold.   When we do an indoor air quality evaluation and test for mold and find normal indoor fungal ecology, we start talking about CO2 and other “suspects”, and blank stares ensue.

Mold and even CO2 are not always the smoking gun, meaning  CO2 levels alone do not determine overall indoor air quality. Other pollutants, including volatile organic compounds (VOCs), particulate matter, cleaners and other chemical contaminants stored or used indoors can contribute to and degrade indoor air quality.

To maintain acceptable CO2 levels in buildings, proper ventilation systems and practices are mission-critical. Indoor CO2 concentrations are a combination of outdoor CO₂, indoor breathing and the ventilation rate of the building (the HVAC is the lungs of the building). As buildings and homes become more energy-efficient and airtight, this means we have less fresh air and an increase in CO2.

Couple that with the fact that most all ventilation systems recycle indoor air to conserve energy, essentially moving the contaminated air around rather than cycling in new air. This results in high CO₂ concentrations and poor indoor air quality.  We thought that due to covid there would be an increase in upgrades to HVAC systems that would increase the intake of outside (fresh air) which helps with indoor air quality.

Air Quality Issues? Call the Experts

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A Phase I ESA is like your common screwdriver, a trusty, and dependable tool that most people know what it is used for, just like buyer due diligence, which is your insurance when buying a property.  A Phase I when completed properly provides protection under CERCLA, the Federal Superfund law, so Federal protection.

A Preliminary Assessment or "PA" is more like the tool in your workbench that you are not 100% sure what it is or how to use it.  New Jersey has its own innocent purchaser defense that requires a property owner to demonstrate that, at the time they acquired the property, they did not know and had no reason to know that any hazardous substance had been discharged at the property, by performing an “all appropriate inquiry” prior to purchase.  The PA provides NJ innocent landowner defense. 

A Phase I Environmental Site Assessment is meant to identify Recognized Environmental Conditions (REC)as defined by the American Society for Testing Materials (ASTM).   A Phase I report will include a comprehensive records review, interviews with knowledgeable parties, noninvasive walking inspection of the property, any data gap identification, an environmental lien search, and a comprehensive historical records review (think a 100 year lookback).

The current ASAT standard for a Phase I is E1527-21 which outlines how to assess the environmental condition of the Property utilizing the All Appropriate Inquiry (AAI). AAI is defined as an inquiry into the previous ownership and use of the Subject Property consistent with good commercial or customary practice as defined by CERCLA 42 U.S.C. §9601(35) (B). According to ASTM E1527-21, non-scope considerations that a consultant may want to assess in connection with commercial real estate and to which no implication is intended as to the relative importance of inquiry into such non-scope considerations consist of: asbestos-containing building materials; radon; lead-based paint; lead-in-drinking water; wetlands’ regulatory compliance; cultural and historic resources; industrial hygiene; health and safety; ecological resources; endangered species; indoor air quality; biological agents; and mold.

A Phase I includes zero testing but may find RECs that require testing.  The Phase I evaluates a property’s environmental condition and assess its potential liability for contamination. 

A Preliminary Assessment follows EPA guidelines not ASTM and is like a Phase I on steroids. The Preliminary Assessment will include an Order of Magnitude Analysis to ensure that previously generated environmental data is compliant with current regulations.  The PAR (Preliminary Assessment Report) is more detailed regarding both research and database research.  The Preliminary Assessment will look at historical manufacturing directories, deeper level of contamination identification, including recommendation(s) should the PA reveal any Areas of Concern (AOC) that require further investigation.  The more extensive environmental evaluation in a Preliminary Assessment entails a search/evaluation of the Site, specific to both current and historic operational and environmental information to determine if there have been any confirmed or potential releases or discharges.  A key part of this is an “Order of Magnitude” evaluation comparing past investigation results to current regulations and standards. Standards change and what may have been acceptable in the past can be out of compliance today.  Past environmental investigations can be found to be lacking and not compliant with today's standards, thus requiring further evaluation.  The additional layer of evaluation helps support a property owners NJ Innocent Purchaser Defense and, in some circumstances, can help acquire funding to remediate sites should contamination be found that was not identified in the report. 

Phase I  Preliminary Assessment Pro Tip 

In New Jersey, if you are opening a daycare or are subject to ISRA,  you need to complete PA, as NJDEP requires a PA not a Phase I.

Important facts about a Phase I vs a Preliminary Assessment

1.   A Phase I ESA is a screening tool to evaluate possible environmental liabilities at a property.   It is strictly lender level ASTM compliant research and data review for financial transactions. The party paying for the Phase I may choose to not investigate(test) any RECs from the Phase I.  A Preliminary Assessment covers state (NJ-specific) liability and is necessary to be in compliance with NJDEP's Technical Requirements for Site Remediation (N.J.A.C. 7:26E)  to obtain protection from potential liability as an innocent landowner (under the NJ Spill Compensation and Control Act N.J.S.A. 58:10-23.11) 

2.  The timing of a Phase I is 2 to 3 weeks.  A Preliminary Assessment takes longer and can  take 20-45 days, due to the additional research involved and you have to wait to receive File Review replies from local and state agencies.

 Can you combine a Phase I & Preliminary Assessment?

Curren has been working on PHIs for over 30 years and this has been a more recent trend in real estate sales.  Curren has been performing PHI/PAR reports for many clients with legal representation in the transaction.   

Phase I or Preliminary Assessment Questions?

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Phase I is the foundation of due diligence when buying a property. Phase I environmental audits are so important for purchasers of commercial real estate. Environmental regulation places the burden of environmental cleanup on a property owner.  If contamination occurred at a property 40 years ago and 5 owners ago, regardless of who owned the property in the past, the current property owner is the Responsible Party for the cleanup. 

Short story, a professional firm, was closed over a weekend.  When employees returned on Monday, they found a 14,000-gallon tank in their parking lot.  The tank was dumped there over the weekend.  This dumping was reported to the police and security cameras caught the entire process, unfortunately, the cameras could not decipher the license plate.  The bottom line the property owner had to pay to properly dispose of the dumped tank. 

That said, how do you know you are getting the best Phase I?

The environmental company should express that the  Phase I can be completed within 3 weeks on average.   Longer time frames would occur if there are government records (environmental reports at the State) that must be reviewed which can take three (3) more weeks to access.  You, as the client, need to be told that Phase I may not be able to be completed as fast as you would like, which many environmental consultants do not want to address.

Quick Story

Environmental company out of Buffalo, NY, did a Phase I at a property in Southern, NJ for an SBA loan.  Timing was mission critical, Phase I report was completed but it had a large data gap, as their recommendation below states:

Recommendations
Additional investigation is warranted to assess the on-site subsurface conditions due to the potential for on-site USTs and long term automotive repair, and should include the area of the floor drain/sump discharge and former in-ground lifts. A review of the 2016 NJDEP Case may help reduce the scope of work. Nevertheless, if investigation identifies a concern, further investigation/remedial work may be required.

Reading between the lines here the consultant knew there were reports with NJDEP but did not review them as they had to complete the Phase I in a short time frame.  Fact, the Phase I was not complete and should not have been issued until the State files were reviewed. Now the consultant wants more money to review files that should have been reviewed as part of the Phase I.  This is very common and wrong on many levels.

Your takeaway should be that you have to be provided realistic time frames to complete the Phase I.

It is estimated 70% of Phase I's require some form of a Phase II.  Now understand that while a Phase I could be classified as white collar, a Phase II will include an aspect of blue-collar work.  Most environmental consultant do not staff people or equipment necessary to perform a Phase II.  Many Phase I customers end up getting hit with the markup from subcontractors that consultants utilize for the Phase I.  You also get wacked with dealing with a 3rd party schedule.

Quick Story

Curren completed a Phase I for a business and property being sold.  Phase I found contamination, buyers bought the site and one of the partners had a friend that worked at another environmental company, that took over the management of the contamination post purchase.  The rub was the friend's company, owned no equipment and subcontracted everything and they had fallen into and out of bankruptcy several years ago and had a long list of vendors they never paid.  Curren Environmental got called back to supply equipment for the investigation and remediation of the site, only Curren couldn't extend credit to the environmental company due to their prior bankruptcy.  The buyer had to pay for all our work which the partners questioned why they switched companies in the first place.  I think their biggest concern was the financial health of the company they hired.

The lesson here is hiring a company that covers tasks of Phase I, II & III, can make your project smoother.

3    Ask the consultant to Predict Your Future

• When you hire a company for environmental you want experience.   The more you know the better you are at evaluating  risk.
• Buying a farm = GPR for tanks, past farmer dumping and pesticide contamination.
• Buying a gas station = former tanks
• Buying a strip mall = any past tenants that could cause contamination?
• Industrial Land = What operated there? Manufacture companies and waste generation.
• Buying land to redevelop = Any off-site contamination concerns that could affect your development
• Known Contaminated Site = what has been done and how viable is owner of value of land vs contamination

If you give us the site address and some prior history, the crystal ball can go to work to prep you for what could be in store for you.    This is often bad news and potential negative issues that could affect the transaction, but topics that you should be aware of during your due diligence.  This may even deter you from proceeding with the purchase.

Expert Environmental Advice for over 25 Years

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A New Jersey Lead Safe Certificate is good for 2 years but can last 3 years.

When a certificate expires, you have to have another inspection, either after two (2) years or between two (2)  2 years and three years.   The New Jersey Lead safe certification is never-ending and your obligations are perpetual. The law is also very confusing, so let's clear up the biggest question people have which is how long does the lead safe certificate last?

That answer is confusing as is the NJ Lead Law, so let me clarify.

A lead safe certification lasts two years.

But if you have a tenant that occupies a rental unit that has a valid (unexpired) lead safe certificate and that tenant remains a tenant past the 2-year certificate expiration, then the cert can be valid for 3 years (from date of issuance) or shorter if the tenant only stays say 6 months past the 2-year period.

Lead Safe Certification Duration Example

Let's say you have a tenant that signs a 5-year lease.

You get a lead safe cert that’s good for 2 years.

The lead safe certificate will last 3 years because a tenant has occupied the unit during the initial 2 years and the law has a belief that the tenant knowing the property is lead safe would notify the landlord if it became unsafe. This carnal knowledge so to speak allows the cert to last 3 years.

Now at the 3-year mark, you must get a reinspection, even if the tenant is staying. The longest anyone can go without another lead inspection is 3 years.

Following this example, when this dream tenant who has signed a 5-year lease leaves at year 5, you must get another inspection.

Lead Questions? Call The Lead Experts,

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In the United States people would initially heat their homes with wood up until the early 1900's. Then the use of coal became popular from 1920 to 1940,  and then oil heat was king post WWII. Natural gas came into play in the 1990s  and finally natural gas (1990's).   Homes built pre-1990 have a high probability that oil was a fuel source at one time.  After World War II oil was plentiful and cheap,  the United States was a steel-making machine.      Cheap oil and industry-dominating steel production = heating oil tanks, buried and above ground for commercial and residential properties.

As of today, oil has been replaced largely by natural gas that is piped into homes which removes the need for calling for oil delivery to fill up a tank.  When neighborhoods that originally never had natural gas were piped for gas homeowners slowly upgraded as their heaters needed replacement.  What happened to the oil tanks? For the most part, they were abandoned, disconnected from the heater, and left where they were buried in the ground or in a dark corner of the basement up to about the mid to late 1980s.   In the 1990s some tanks were removed, some were abandoned in place by filling with an inert material like sand, concrete or foam and some were simply left where they were.

This brings us to today why should anyone be concerned about an oil tank, oil comes from the ground.   Well, New Jersey has no past or present drilled oil wells, we are not an oil-rich state, simply put oil is not naturally present in the ground in New Jersey.   What we are burdened with are regulations.   Yes, there are regulations governing oil tanks.  The most broad-reaching regulation is the Spill Act from the 1970s which says any release of a contaminant to the environment is reportable to the New Jersey Department of Environmental Protection (NJDEP).   On top of this law are regulations that dictate what amount of oil is permissible and what is not.  Levels above what is permissible require what is known as remediation.   Other laws are construction defining what you must do to a tank when you remove it from service (either remove it or clean and abandon it in place).   You are also burdened with the definition of a Responsible Party (RP).  An RP is kind of like a store policy that says you break it you buy it.  In terms of an oil tank that leaks and requires remediation, well if you own a property or buy a property with an oil tank that leaks, well you are responsible for addressing it, hence the Responsible Party term.  This is why home buyers are wary of oil tanks.  This is why homeowners selling a property with an oil tank have problems, nobody wants to have the financial burden of cleaning up an oil tank leak.   Let me add another layer to this, banks, and mortgage companies are wary of providing financing for a home purchase if an oil tank was or may present.  Oil contamination can and has devalued homes, somewhere it makes sense for homeowners to walk away from the mortgage, leaving the bank with the problem.  

How often do I hear ......"You have the black mold"!

Mold is a four-letter word you don't want to utter or hear.   Mold is alleged to be the cause of so many health issues and typically by people self-diagnosing themselves.

If there was black mold, you would also hear about brown, grey and white mold.  Black mold was invented by the media and is only the color of a mold, just like brown and grey, and white colored mold. 

Most all molds have names that are very difficult to pronounce and many types of mold are black in color when you see a black-colored mold you could be seeing over a hundred possible types of mold. 

The list below is a snip of a fungal library, you can see molds under A, B, F S, what you can't see under the B list is a Black Mold or any molds in the list that are named for a color. Naming a mold for color is not performed.

Pro Tip

If you have mold you have a water problem which caused the mold.  Bottom line you don't have mold unless you have excess water. If someone says you have black mold, you are being scammed.

True Story

A guy built his own house, that had a crawlspace.  He installed vents in the crawlspace, as was required by code.  He also opened the vents in warm weather and closed them in the cold weather, as he was told to do.  Fast forward 10 years, he is selling the home, and the buyer's inspection process finds mold in the Black MOLD crawlspace.     He became our client and we had to explain to all parties that black mold doesn't exist and that there was indeed mold in the crawlspace, from moisture in the air caused by the opening and closing of the vents.  Had he sealed the vents and operated a dehumidifier in the space, he would have removed moisture because moisture is the fuel that drives mold growth, but that is not what the construction codes say.

You see at Curren Environmental, we are environmental professionals, we provide advice regarding a variety of Environmental topics, mold being just one of them.  No hype, no trying to scare you, science-based assessments of problems and their associated solution.

Want Expert Mold Advice?

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Are you buying a house with mold? Is mold harmful? Should I be concerned about mold?

Mold is ubiquitous in our environment, but not all homes have mold and visible mold growth is a sign that something went wrong.

Mold can have an adverse health effect on people. Mold affects different people differently. Clearly if you are not allergic to peanuts or dairy products, consumption of these food items (within reason) will not cause you harm.  The problem with mold is people are subjected to it unknowingly after they move into a new residence and after days, weeks or months health concerns arise.   

Should you have a mold inspection prior to a home purchase?   Yes, if you want to ensure the home doesn't have mold, years you should have a mold inspection.

Mold can be harmful in a variety of ways.  Inhaling mold spores creates a reaction, which is your body finding that it doesn’t like the mold and your body fights the spore.

Think about how pollen can create a reaction in susceptible people. Now certain molds can produce mycotoxins and microbial volatile organic compounds which can affect humans. These are created by mold growing, you are inhaling these compounds when you smell the musty odor associated with mold.

Understand mold digests organic material, a great example is how mold breaks down your compost pile outside. So mold in a building will consume organic material, such as paper, sheetrock, cellulose, wood, and other items. As these materials are consumed, compounds are made (think stomach acids) by the consumption of the material as well as the building materials breaking down into other compounds. Paint is paint, right? Or is paint a number of compounds that are the ingredients of paint? The paint is present on a sheetrock wall, when this wall has mold growth, mold breaks down the paper and the paint causing off-gassing. A person can be allergic to the compounds that mold creates when consuming your home. Now mold is really resilient and will grow when conditions permit the mold to grow and will go dormant when the conditions are not conducive for mold growth. So, if you add water and warmth to a room, mold can grow. Take away the water and put temperatures below 50 degrees and mold goes dormant, waiting to grow another day. If you intermittently smell a musty odor, it mold gets wet and grows. The smell goes away when the water goes away. This situation means you have a water leak that is intermittent.

Mold inspections can test for hidden mold and molds that are not actively growing. An abundance of invisible airborne mold spores can be a health hazard to humans when inhaled.

Is mold everywhere? Yes pretty much anywhere on earth mold is present, that said we have completed thousands of mold inspections, and not all inspections find mold. So if someone tells you every home has mold, well, it may be accurate, but it depends on what level of mold growth and airborne spores are present.

When Mold is present it points to an issue, could be a water issue, moisture, leak and much more. Want to speak to a mold expert?  

856-858-9509

HUD's New Final Rule, 24 CFR 35, dictates that lead dust should be below the following standards:

Less than 10 µg/ft2 (micrograms of lead per square foot) on floors, 100 µg/ft2 on windowsills. 

100 µg/ft2 on window troughs

When a lead wipe sample fails, it indicates that lead dust is present on the surface sampled.

The lead risk assessor should be able to point to the causes of the wipe failure so appropriate corrective action can be implemented.  To be practical, you are not wipe sampling when deteriorated paint is present.  So, when a wipe sample fails you must look to see how many failed.  Is it systemic through the property or in an isolated area?  So if you have four (4) floor samples and one fails, it needs to be evaluated as to why only one failed. 

The amount of lead that meets clearance criteria is a very minimal quantity and is often not visually seen with the naked eye. In recent years the lead dust limit for floors was four (4) times higher than its current standard. This could lead to failures if surfaces were not properly cleaned, even when deteriorated paint is not present.   All wipe sampling represents a snapshot in time regarding lead on a given surface. Once failure has occurred the area must be cleaned or recleaned until post-cleaning wipe samples meet criteria. A successful method of cleaning involves sequential cycles of HEPA vacuuming and wet wiping surfaces. Wet wiping can be performed with cleaning compounds specific to lead.  Lead dust is chemically sticky, so utilizing a  cleanser to break the chemical bond is critical.

You may find the lead dust is from deteriorated paint, which would require abatement or interim controls.  Interim controls are a set of measures designed to reduce temporary human exposure or likely exposure to lead-based paint hazards, including specialized cleaning, repairs, maintenance, painting, temporary containment, and ongoing monitoring of lead-based paint hazards or potential hazards. You can think of interim controls as dust removal, paint stabilization, and/or control of friction/abrasion points on building materials that are in good condition and repairable.     Seriously deteriorated surfaces that cannot be “repaired” will require replacement/abatement. 

 When the order is for interim controls, the following criteria shall apply:

1. The person performing the interim controls shall: Complete training in accordance with the Occupational Safety and Health Administration Hazard Communication requirements at 29 CFR 1910.1200 (see (a)1i and ii above, have successful completion of training as a certified renovator for New Jersey through the Department of Community Affairs;

The United States Environmental Protection Agency (EPA) certifies Renovation, Repair, and Painting contractors. These firms are certified to perform renovation, repair, and painting projects that address lead-based paint in homes and childcare facilities. This work is often involved in interim control methods. Information may be found online at: https://www.epa.gov/lead/leadrenovation-repair-and-painting-program .

2008 Lead Renovation, Repair and Painting Rule beginning April 22, 2010, firms performing renovation, repair and painting projects that disturb lead-based paint in homes, childcare facilities, and kindergartens built before 1978 must be EPA- or state-certified and must use certified renovators who follow specific work practices to prevent lead contamination.

After interim control and or cleaning is performed, the space to be sampled should be kept closed to human entry prior to performing post-wipe sampling. This ensures accurate wipe sample results that are free of outside sources of lead.

If lead wipe samples fail as part of a Risk Assessment in New Jersey under the NJ Lead Safe Law, landlords have 30 days to address the problem so reinspection and sampling can be performed.

If the unit is occupied where a wipe sample failed, the lead risk assessor or the certified evaluator thought there was a serious problem, the evaluator or the local health department could do a complete lead hazard investigation and make a decision on occupancy.   

Call the Lead Experts

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Does the owner of the property have to be made aware tanks weep is being performed?

A tank sweep is a form of due diligence, like a home inspection, every seller has to allow inspections, although they don’t have to agree to fix anything.  Every seller should be aware that the buyer is paying for these inspections, so they are aware these items are a concern.  Nobody likes to be surprised by problems, which inspections by nature are looking for.

The owner should be aware we are doing an inspection specific to oil tanks because if we find a tank we want it removed and I was told they have no knowledge of any oil heat.

Do you need to go inside the building during a tank sweep?

100% you have to go inside the building and inspect for evidence of prior oil heat.  Anyone not going inside is doing an incomplete inspection. To provide a thorough tank scan, Curren needs access to the basement heater room during the scan and no cars in the driveway.

An oil burner switch and an oil burner fuse inside the door are both clues that are indicative of oil heat.  Curren also sees "cut outs" in the flooring of the basement, or lines sticking out of the flooring, both are clues that an oil tank was present on the property at some point in time. 
 

Speaking of visual assessment as part of a tank sweep, one of the photos below suggests an oil tank the other is 100% not an oil tank.  The trained technician knows the difference.

What happens if you find an oil tank during a tank sweep?

When a tank is found the owner/seller must be informed of the tank and that it needs to be removed and tested to verify no leaks.  But it goes deeper than that, a cascading series of events occurs.

1. The settlement will need to be pushed back typically a month or more as you need time to get permits, remove the tank and get soil sample results. Example: We just had a tank located and removed prior to the settlement they pushed back settlement twenty days on day fourteen we removed the tank and it leaked, now the leak is reportable to the state environmental agency, and you will have to do reporting to the government, which takes time.   As we waited a week for the test results, the settlement was not moved back any further, three days before settlement we get all the test results 100% failure and soil remediation required. The Realtor, mortgage company, and buyer were like deer in the headlights as there was no backup plan.

2. Find a tank, the seller must address the tank for the buyer or cancel the contract and disclose the tank to all FUTURE BUYERS, meaning updating the Disclosure Statement.  A Realtor must update the listing referencing the tank. Example: had one where we found a tank, the seller canceled the contract, and got a new buyer but NEVER DISCLOSED the tank.   Buyer found tank AFTER PURCHASE.   Man, the number of attorneys and people getting sued was large and the buyer walked away winning.

3. Find a tank, and see if the seller will take care of it because as you have just read, they need to do the right thing.  Buyer can push back settlement until at least the tank is removed and soil sample results are returned, and it can be determined if remediation is or is not required. Example: Had this situation occur, but the tank was found under a deck, buyers paid for soil testing where we could test, and contamination was found.   We found cancer, but the extent was not known because the deck prohibited access to drill test borings.   The buyer and seller came to some financial agreement on the purchase and the buyer got monies back or off the purchase price.   We remove the tank and performed a remediation, but the contamination was extensive, and the buyer needs more money to clean up the leak but the seller is saying they agreed on an amount and no more funds will be provided.

What are appropriate Due Diligence time frames?

One of the most common issues in buying and selling real estate is unrealistic due diligence time frames & settlement dates.  Settlement dates that are set PRIOR to any due diligence being completed is the biggest failure. If you are involved in real estate and the due diligence finds an Area of Concern (AOC) or a Recognized Environmental Condition (REC) 80% of the time the settlement date needs to be pushed back.

Quick example, completed Phase I ESAs for a site in New Jersey and Pennsylvania, both found potential USTs. Both required a geophysical, at one of the sites the property owner of 29 years swore there were no tanks, but they had zero paperwork to support that statement. Fast forward three (3) tanks were found between the two sites. Now you have to get NJDEP & PADEP permits and register the regulated tanks, both sites took about 50 days to get government permits.

Understand that Due Diligence has Many Layers and steps.

Take for example a farm being purchased that required a Phase I ESA, the due diligence period was set for 30 days with settlement on the 31st day.   The concern of the parties was whether the Phase I could be completed in 30 days, 90% of the time it can be, for the record most Phase I's can be completed in 2 weeks, sometimes 3 weeks.    But the real issue is the parties left no time for a Phase II, if required, and most all farms would require some form of a Phase II and that's coming from 30 years of experience.  Even if you tell people testing is likely going to be recommended, no one listens and no one extends the due diligence period, but everyone gets upset when they have to change the settlement date. Sure the seller could have done their own Phase I & II prior to selling the property and saved time and headache, unfortunately, few sellers are that forward thinking.

Let’s say, a property has had remediation completed, and multiple areas on a property were remediated. We just had a site that fits that bill.   A Phase I is still completed to protect the buyer but the Phase I has to review state environmental reports that were submitted, which can take 4 weeks to get copies of reports.  (Fact most owners have incomplete reports or cannot find the reports).   Obtaining records from the government is not quick and yes a one (1) month wait is not uncommon.  The 4-week due diligence period must be extended.  

On the site we just dealt with, which was commercial, it was disclosed that multiple AOCs had been remediated and closed out with the state.  But this site had other areas that were not remediated that warranted testing, multiple, like $42,000 worth of testing.  Granted the property was 10.7 acres, listed for close to 3 million dollars, so it should not be surprising that AOCs existed on the property and were not evaluated by the seller, I mean few people who own real estate want to find a problem. The buyer still wanted to proceed with testing and purchase, and the seller did.  Well, the seller ended the contract, they were concerned problems would be found they would have to address.  Now, did the seller side warn them that this scenario was possible, hard to say but I would venture a guess the answer is no.  Is the seller wise in thinking another buyer will come along to buy the property without testing? They can hope but are unlikely.  The buyer was more than upset that a deal valued in the millions would be stopped in its tracks due to their desire to test and ensure they were not buying a contaminated property.  The buyer also was willing to contribute to some amount of remediation.  

But let’s say the deal kept moving forward and the seller gave another 30 days of due diligence.  The testing could be completed in this 30-day window, but if remediation was warranted, 30 days is not enough.   But the seller says we can price out cleanup and negotiate a price reduction within 30 days.   Still an epic unrealistic situation as Phase II is just evaluating if contamination is present not the extent.  Say three areas out of 14 need remediation (an unrealistic low number but just play it out).    Your next step is to define the 4 areas which could take another 30 days maybe 90 depending on soil and groundwater.   This situation actually played out on another site and the due diligence was 9 and 1/2 months.

Pro Tip

All you bankers, real estate professionals, sellers, buyers, and lawyers listen up.  Ask your environmental professional what they would estimate for a reasonable due diligence, when a Phase I & II may be necessary.  Before you ask do not give them your desired date of settlement, you will likely bias their answer. Although as environmental professionals we are not clairvoyant, we can assess sites from a desk, and utilize experience from other sites we have evaluated many times before to say you may want to budget 60 days or 90 days, if it's less, well then you can settle sooner.  You should also consider if any cost sharing will occur with Phase II between buyer and seller and what the seller's pain point is on paying for remediation.   

For example, the client had a retail strip of stores with historic groundwater contamination. The economical solution was to monitor the groundwater for 8 quarters to show a declining trend and permit the contamination in place.    The 2-year budget was $86,000, which was also the amount the seller was willing to place in escrow after the sale for the buyer to use to pay for the work. But the $86,000 was a budget and could trend higher or lower.   This confused the buyer as well as the fact that there would be costs after the site is signed off that the owner would be responsible for and this is assuming groundwater trends lower. Some sites do not and you need to perform remediation to push levels lower.   This is another situation where all parties were not transparent regarding time frames and costs and what each party was willing to accept.

Last example and let me dumb this down for you.  

A residence had a leaking tank, which was discovered during due diligence.  The future cost of remediation was determined, what was not discussed was the time frame to remediate and when state would review and sign off (typically 2 weeks to 6 weeks to 2 months, depending on your state).     Well at settlement these time frames were discussed and the buyer backed out at the settlement table.  Now the blame on this one was the environmental company not timelining the remediation (parties not asking either).   People went in with blinders on and the deal fell apart.

If your due diligence finds environmental concerns, know that environmental has no drive-through lane, no same-day delivery, heck not even a delivery date.  Like medicine and law, it’s a practice, a somewhat inexact science, but data sets are out there if you are willing to listen.  So rather than say due diligence is 30 days, ask what the consultant thinks is the reasonable time frame.   Play out a couple of scenarios so all parties have an idea of what could happen, plan for the worst, and hope for the best.

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