There are inherent risks in life and in particular when you purchase something.   Warranties on products including cars are meant to balance the risk.  But when you buy a commercial property, you are buying more than the land and any improvements, you are buying any environmental issues past or present unless specified otherwise.  (There are sites that have government permitted contamination, that is a restriction on the property for sure. but it is s defined environmental liability). 

I am referring to the purchase of a property that has undiscovered environmental issues.  How you avoid buying a contaminated property is by performing Due Diligence such as a Phase I Environmental Site Assessment.  More about Phase I ESA Click Here.

As this article states when should you be concerned about environmental issues on a commercial property?

The safe answer is on every commercial property that you have not completed your own due diligence.

Yes, that downtown property you want to buy may have been an auto garage, dry cleaner, part of a rail spur, I've seen tanneries (Tanneries are where animal hides are tanned, and the wastes generated from tanneries are considered a pollutant to the environment and has potential to pollute both soil and water because of the use toxic chemical constituents in the tanning process). 

The rub of downtown areas is they were the center of commerce, which can cause pollution long before environmental regulations became the norm.   Buying close to a rail line?  Well rail roads caused contamination and land was often built up with historic fill.  (Historic Fill material was commonly used to raise the topographic elevation of properties.    The fill material is composed of non-indigenous material… which may have been contaminated prior to emplacement and is in no way connected with the operations at the location of emplacement and which includes, without limitation, construction debris, dredge spoils, incinerator residue, demolition debris, fly ash, or non-hazardous solid waste). Because of the nature of its composition, historic fill material is a widespread concern for many property owners and potential property purchasers.    In short, the property can have at the time of placement legal contamination, which today is no longer legal.

Yes, none of this is fair.  There are other warning signs when you buy a commercial property even when you perform due diligence, I will run down a couple of items buyers should be concerned about.

1.  A Phase I includes interview and questionnaire with the owner who is typically the most knowledgeable party.    When this can't be accomplished you have important data gaps, which may be intentional on part of the seller.

2.   The owner has no prior environmental reports, meaning they didn't do their own Phase I or will not supply their report.  Want to know why an owner may not want to be interviewed for a Phase I, their lack of due diligence can be a driver.  

The historical map below shows auto sales at a downtown property, and it also lists 550 gallon gasoline tank in the street.  That tank and contamination belongs to the property and will only be known if you do due diligence. 

3.  The Phase I leads to a Phase II, which is testing and can absolutely open up a can of proverbial worms.  If you test you have a chance of finding a problem.  No testing?  Well 100% chance of finding nothing.  But the rub is when the owner denies or limits testing.  For example, we had a site where both soil and groundwater testing were warranted.  The owner did not want groundwater tested because the property had municipal water.  Groundwater is typically the 1st water bearing zone on a property, a good average is 16' to 20' deep.  You are not drinking this water ever, but if this water is contaminated, well it belongs to the owner.   My point being sellers will come up with some nugget of reason why we do not need to test, which is irrelevant in the context of environmental due diligence.

4.   Owner provides reason why due diligence is irrelevant (remember buyer pays for the work not the seller).  Case in point client buying a former appliance store, which was a former laundromat.   Seller wanted no testing because refrigerators and microwaves are not an issue and a laundromat, well that's just dirty cloths.  Fast forward we test groundwater water and find dry cleaning solvents.  Conclusion, the laundromat did dry cleaning.  Saved our client $165,000.

Commercial Property Purchase Pro Tips

Start your due diligence and do not consider Due Diligence to be a hand stamp, because if you find an issue it will take time address it.

Understand that your proposed settlement date was likely set PRIOR to performing Due Diligence.  When Due Diligence finds an issue settlement could be pushed back weeks, months even years. 

Expert Environmental Advice 888-301-1050

NJDEP No Further Action Letter or "NFA"

An NFA is a document, typically one page, that is issued by the New Jersey Department of Environmental Protection’s (NJDEP’s) Heating Oil Tank (HOTs) program to close out the contamination issue of a heating oil tank discharge.

Basically, the No Further Action Letter is an environmental release of “No Further Action” from the New Jersey Department of Environmental Protection (NJDEP) and the culmination of a property's environmental remediation, which can include tank removal, remediation, and testing.

Only residential sites receive an NFA.

Can an NFA be rescinded?

Unfortunately, an NFA can be rescinded or withdrawn if it is found that the subject site that received the NFA has contamination that is above applicable NJDEP standards for either soil or groundwater. Rescinding an NFA is rare but does happen.

Will every residential oil tank receive an NFA letter?

To be applicable for an NFA letter you would need a site with a tank that leaks.   You would then need to document that the leak as it occurred is to the extent (minimal) that petroleum levels are below NJDEP standards or that remediation was performed that reduced petroleum levels to be within NJDEP acceptable standards.  If your oil tank does not leak, you will not obtain an NFA. If your oil tank does not leak, the NJDEP and the EPA are not contacted.  

How do you obtain an NJDEP NFA?

You must employ an NJDEP-licensed firm and an individual for the work and submit documents in the form of a report with applicable NJDEP forms to NJDEP with a $400.00 review fee. The NJDEP will review these documents, typically within 30 days, and issue an NFA if applicable. If the NJDEP reviews submitted documents and find the site is not in compliance, the NJDEP will not issue an NFA and will list what is lacking and needs to be performed to obtain the NFA

Can a site receive two NFA letters?

If the site has two leaking oil tanks, of which some properties had 2 oil tanks, then yes two NFA’s can be obtained.

Can a property be sold without an NFA letter?

There is no law that prevents the sale of a residential oil-contaminated site. Yes, a property can be sold without an NFA letter, and a contaminated property can be sold, it is finding a buyer that would be difficult.  That buyer may not be able to get a mortgage or home insurance due to the contamination. 

How can I obtain a copy of an NFA for a site where an NFA was issued?

First, if an NFA is issued, the property owner should hold a copy of the letter and the NFA should be issued to subsequent property owners during the sale of the property.

NFAs are now electronic.  

An NFA is a matter of public record so a copy can be obtained via an OPRA.  An NFA is issued to the responsible party (RP), typically the property owner, a copy to the local Board of Health and to the municipal clerk of the city, township, or municipality where the property is located.  The NJDEP also has a copy.

CALL CURREN TODAY

Environmental Assessments, Environmental Audits, and Environmental Due Diligence are performed to identify any environmental concerns that need to be addressed before a property settlement occurs.   Environmental due diligence is the assessment of known and potential environmental liabilities, unknown or not disclosed, associated with real estate.   It is an integral part of any commercial real estate transaction. The environmental audit is meant to protect all parties involved in the transaction, including the lender, but contamination devalues the asset. Without an environmental assessment, the buyer buys contamination and owns the problem even if you know it is present or not. Sellers do not want to enter into litigation or any dispute after a sale occurs due to contamination being found.

Here are some of the most frequently asked questions concerning environmental site assessments from 30 years of Due Diligence experience:

• Why do I need to do environmental due diligence?
• When is environmental due diligence required?
• Who pays for the environmental audit?
• What is involved in the environmental audit?
• Can we test immediately?
• How long does an environmental assessment take?
• How much will it cost?
• If I am paying cash, do I need an environmental audit?

 Those are very common questions and we even get them from groups that already have substantial real estate holdings.   The answer to each question depends on the property.   Some sites require more due diligence than others, industrial sites would demand more extensive evaluation while buying a parcel of land from a closed church would require less. I do not reference a downtown storefront as getting a hall pass on due diligence as downtowns were the epicenter of commerce and there are plenty of contaminated sites along the main streets USA.

 Why do I need to do environmental due diligence?

Before environmental regulations, pollution was legal so to speak. The federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), aka “Superfund.” Gives the Environmental Protection Agency (EPA) EPA which was created on December 2, 1970, by President Nixon the authority to pursue a private party or current or past owners or operators of contaminated property for costs associated with environmental cleanup.  CERCLA holds owners responsible for cleaning up contamination on their property, even if they did not cause or contribute to the problem. An important feature is that CERCLA liability is joint and several meaning any liable party may be required to clean up all the contamination, even though that party only caused a small amount of the overall contamination. It is not 100% fair, but it is meant to catch up on past pollution that occurred prior to the regulation. If polluters knew they were polluting is open to debate.

When is environmental due diligence required?

After reading how liability is assigned to what our clients would call an innocent landowner, every property could benefit from an environmental audit prior to sale.

Who pays for the environmental audit?

The party that receives the most protection pays for the environmental study, which is typically the purchaser. Not many banks contract for environmental audits, Phase I ESA, on behalf of the borrower, and this cost is passed through to the borrower.

There are cases where the Phase I environmental Audit is split between buyers and sellers.

There are also cases where an owner contracts for the environmental audit to address any environmental issues prior to listing the property for sale, these are not common, but it is safe to say when this occurs the property sells faster.

 What is involved in the environmental audit?

There are varying types of environmental audits, the most common is a Phase I Environmental Site Assessment (ESA) which is formatted by ASTM to standardize the audit.

A Phase I ESA is an investigation into past and current ownership and uses of the property to assess the possible existence of contamination.  Hundreds of pages of data are collected for each site, each site is physically evaluated, and knowledgeable parties are interviewed, that is the nutshell explanation. A large office building today could have been a lumber, coal, and fuel yard (true site) in 1910.  

In layman’s terms, the purpose of any environmental audit is to identify potential environmental conditions that may affect the property or trigger liability to a property owner.

Can we test immediately?

All environmental audits start with research and no testing is performed as you first need to evaluate the site to determine if it is a target-rich environment for testing. The referenced coal fuel yard required testing where materials were stored and testing also found buried petroleum tanks in the parking lot.

If a site is deemed without any issue, you never proceed with any testing. Conversely, a site where historic suspect contamination may be present would warrant testing. A small apartment building on a large lot found operation in the 1890s that left contamination on the site the owner had to address to sell the property to a developer. and helps to determine whether further due diligence is needed and whether a Phase II ESA must be conducted.

How long does an environmental assessment take?

On a basic level, all environmental audits require acquiring historical data for review.   The thoroughness of the acquisition of this historical data adds time and if a site visit is part of the environmental audit that must be arranged.   Allocate 3 weeks for an environmental audit to provide a written report which may say no testing is required or we found multiple areas on the property that require testing. Add testing to the environmental evaluation and you can be months from the finish line.

Be aware that if you get an environmental report within a few days it will be far less thorough than a report taking weeks, that is a fact.  There are many reports we review that was issued and were incomplete due to the consultant waiting on historical data to be obtained. These reports are incomplete and now require a secondary report that may contain data that conflicts with the initial incomplete report. Follow me on this you can’t expect fast and thorough on all sites.

  How much will an environmental audit cost?

The baseline environmental audit is a Phase I ESA that runs between $2,200 to $3,000 depending on the complexity of the site. Be aware as environmental consultants, we do a cursory evaluation on prospective sites to see if the site is going to be a time suck (aka $3,000.00 range) or closer to $2,200 for the average site. Also, know that the cost of acquiring data is set for a single address site, larger sites, and multiple addresses incur higher costs for data acquisition., so you can expect larger parcels to be in between these two costs due to time and data acquisition expense.

 If I am paying cash, do I need an environmental audit?

Generally speaking, performing an environmental audit such as Phase I is important for every commercial property purchase. A Phase I assessment is performed by an environmental professional that analyzes the likelihood of contamination. If you do not need a mortgage and are an environmental professional perhaps you are qualified to not do the environmental.

Know that lenders require an assessment to protect their investment, not to protect you.

Buyer assumes financial risk by not conducting an ESA on a property before settlement. If the environmental audit cost and findings are not within the budget of the purchase of the property, the deal may not be viable.

When I bought my house, environmental inspections were not advised.

As a first-time home buyer, we bought a single-family home. During that period, inflation was high, interest rates high and home prices were high. There were not many homes on the market so there were bidding wars, pay by cash (not paying by cash), and at that time, environmental inspections didn’t matter. What mattered was purchasing your first dream home fast, before it was gone, and being near friends and family, and that home was hard to come by.

Environmental inspections during real estate transactions were not advised at the beginning of the 2000s. Our inspections included a home inspection, carbon monoxide, well water and that’s it. We negotiated a few items and boom, after a little trouble with hurricanes and insurance at closing, we were homeowners. Luckily for us, we had friends on both the mortgage and title side who helped the transaction pull through. But our friends weren’t environmental experts, and we barely had any environmental inspections performed.

Regarding environmental inspections,   I wish I knew what I know now. Working at Curren Environmental is an eye-opener regarding performing environmental inspections. Some of the environmental inspections that every buyer should do are the following:

• Underground oil tank sweep using ground-penetrating radar.
• Radon Inspection.
• Lead Inspection.
• Air quality test.
• Mold inspection.
• Roof inspection.
• Septic – if I had a septic tank.
• Termite Inspection.
• Sewer line scope
• Well water testing.
• Asbestos

While you may think that all those environmental inspections are a little over the top when buying your home, it's not. All of those environmental inspections addressed above may cost you more money, but that money that you are putting out for inspections will save you in the long run.

Underground oil tanks can cost thousands and thousands of money, time, and anguish. If the property you are buying was built before the 1980s, get a tank scan. While the owners may not know there is a tank, they may have bought a home when tank scans were not being performed and may honestly not know if there is an underground oil tank on the property.  

Radon inspections are of the utmost importance. You should be able to search your state for a map of where radon is located, if you are in a high radon zone you should have a radon test run and a mitigation system installed. Radon is unseen and deadly.

Lead inspections are for houses built before 1978. If you have small children, lead inspections should be performed. Lead paint tastes sweet to children and lead is a metal, it never leaves your body.

Mold inspections, mold testing, and air quality tests are considered environmental inspections. Mold inspections look for signs of visual mold growth and water entry. Testing for mold can be done through surface sampling when you think that spot may be mold. Air testing for mold and air quality testing should be done when there was a leak or moisture intrusion and you can not see any visual mold growth and a smell that seems musty, for example, intrusion from an exterior water source such as through the walls. Leaks can occur from above as well, through roofing or through leaking pipes and condensation. A must for air testing is in finished basements, no one has x-ray vision and you don’t know what lurks behind that sheetrock wall.

Roof inspections will determine how old the roof is if there are problems with the roof, and when the roof should be replaced. If you have a septic system, have it inspected.  Find out if it is the original septic system with the property or if it is the 2^nd system. Scoping your sewer line is a must for an environmental inspection. Coming from someone who just had their lines replaced, it is no fun, and no offense to the contractors who do the job, your yard is going to be a mess after.

Well water tests for certain chemicals and contaminants in your drinking water. Also, look for whole-house water filters and tankless water heaters. Water heaters don’t last forever, and a tankless water heater saves on bills, it only heats the water when needed.

Asbestos is found in older homes because asbestos, in the past, was the wonder fiber of the future. Not all asbestos needs to be removed, if it is contained, it shouldn’t be a problem. When asbestos is airborne, it is a problem. Testing the home will help in making decisions later if you decide to renovate the home.

Environmental inspections are key to any real estate transaction. You may not be advised or may not be aware. Do your due diligence and get the environmental inspections done prior to purchase. Once you buy your home, you buy every problem in and around it. We have come across a few environmental problems in our home, and if we had done the environmental inspections, we would have been aware and had those issues fixed prior to purchase.

Have a home older than 80 years?  You may have a cistern.

What is a Cistern?  A cistern is a buried tank, commonly made of brick or metal, and is designed to store water. Cisterns are typically designed for capturing and storing rainwater.  Cisterns are not cesspools that are for septic.

Today some people use rain barrels, so you can think of a cistern as a buried rain barrel.

The water collected in cisterns historically was utilized for two purposes: domestic use and consumption.

Domestic uses of the water are flushing toilets and watering landscaping.  Since water stored is from rainwater the owner of a cistern could reduce the costs associated with the delivery of potable water from utilities.  It could also supplement water from wells on a site that people would use for human consumption.  

You may find you have a cistern by constant settlement in your yard like the photo below or by doing a GPR survey to scan for voids.  GPR Survey many residential due diligence oil tank sweeps find cisterns when GPR is used.    

This cistern was found from the settlement in the photo to the right.   The cistern lost some integrity allowing collapse in a section of the walls, which allowed soils to seep into the cistern void.  This home was circa 1925.    The owner wanted the liability removed so the cistern was filled in place as it had not been used in years.  There are several feet of water at the bottom of this cistern and a person or animal falling into this would hurt.

Curren has over 25 years of experience in decommissioning and abandoning buried tanks.  We recently completed a tank sweep for a home sale.  The GPR survey located a buried metal tank behind the garage which was either an old gas tank, oil tank, or cistern.  Turns out it was a cistern.

Ground Penetrating Radar Surveys for Cisterns

If you are buying a property for commercial use, you need a Phase I ESA to protect your financial interests in the property. Unfortunately, not every building was for sale when you were looking, so your search took months not weeks to find the right property.  To hasten the purchase, you are paying cash and avoid any bank delays,  but intend to get a mortgage after purchase.  The seller wants to settle fast, as they have owned the property for 26 years and are ready to move on.  Your attorney wants to protect your interests with Phase I.   You want to know when should the settlement date be.  So let's do a quick rundown of the timeline for Phase I.

Most Phase I's can be properly completed in 2 to 3 weeks. Some Phase I's can take 4 to 6 weeks.

Some Phase I's take even longer.

Why is the time spread different with each Phase (I,II, III)?

1. We start working on Phase I within 24 hours after a client engages Curren.  (Engage meaning signed contract, & payment).  This is the industry standard.
2. Part of starting the Phase I is acquiring historical records on the property.  Some of these records are purchased by companies that sell such records, it can take a few days to acquire these records.
3. Another aspect of a Phase I is requesting public records from local, county, and state agencies, these records are public records and can take five (5) to nine (9) business days to obtain from the government agencies.  You are dealing with the government, so it takes time.
4. There is also an owner interview and questionnaire as part of the process.  If the owner is unavailable, like in Cuba for two (2) weeks, well that delays this aspect.  Sure, we can interview a less knowledgeable party like the employee who worked at the property for 2 years, but wouldn't you rather have us interview the person who has 25 years of experience with the property?
5. On week two after contracting for the Phase I, you do your site visit, because by now you have obtained and reviewed historical records so you know about the property but need to walk the site to evaluate operations, chemical storage in short things that could affect the property on an environmental basis.  The historical research is looking at potential past environmental impacts to the property.
6. End of the second week or week three (3), the Phase I is complete, it gets peer-reviewed, digitized, and submitted.  You can also ride a unicorn to the settlement table.

What delays the Phase I?

Government records, perhaps you find there are 5,000 pages of documents at the state environmental agency, and it will take four (4) weeks to get those files out of storage and no the owner doesn't have any of these records. 

The owner delays our site inspection and doesn't want to get interviewed, which happens all the time.  Most people who bought a property skipped the Phase I and are not too keen on you doing an environmental assessment on the property.

The Phase I finds an Area of Concern (AOC) or a Recognized Environmental Condition (REC) that is not properly documented.  Oh, and we hear owners say how EPA was on site and checked everything.   Well, if the EPA is federal and if they came on site to evaluate anything, go buy another property because the issues are so bad on this site you need a Federal agency involved whereas the state agency would manage environmental issues on almost all sites.  Been doing environmental consulting since the 1990's I can count on 1 hand how many EPA-involved sites I have dealt with.   So these open issues require further evaluation, perhaps even testing, add a month or more.

Lastly, the Phase I finds a suspect issue that warrants a Phase II (testing).  It happens, it happens a lot, now someone has to spend more money to look for a problem and even more money if a problem requires remediation.     For example, a client is buying a building next to their own office building.  Phase I finds an old UST owner that said it was EPA approved (it was not).   The tank has to be removed and tested and oh it leaked and the tank hasn't been used in 15 years, yes owner forgot to mention it in the interview.  The realtor knew but also said it was all closed out and said this with a straight face and zero documents to support this claim.  Phase I finds a gasoline plume that appears to extend onto the property.  Legal, but the buyer wants to build another office building and this contamination can warrant a vapor barrier as part of the construction.  This adds cost and devalues the property for buyers who may want a concession in a price reduction.

Many companies will not tell you the downside of environmental work, but at Curren we believe in managing client expectations.  Sure, we do many Phase I reports in 2 weeks flat but many are not and by the time you call us you likely already have a due diligence end date AND settlement date,  Both of which were made before any environmental due diligence was performed. 

Lead paint was ubiquitous because it was durable, resisted moisture, and dried fast, two highly prized attributes for paint.  The problem is lead paint was demined that human consumption of lead, via dust or paint chips, generated by deteriorating lead paint was a serious health hazard and in 1978 the Consumer Product Safety Commission banned lead in paint for residential use.  For the record most similar developed nations banned lead paint decades before the United States did.

Unless you complete a lead paint inspection, which is a surface-by-surface inspection of building material for lead paint, you assume that lead paint is present.    More about lead paint inspections can be found at  Lead Paint Inspection.

So you test to know 100% if and where lead paint is present or you assume paint or stain is lead-based.   

You can also have a limited lead paint inspection done when you are having renovation performed.  Limited area-specific lead paint inspections cost less because they take less time to complete. Questions?

Why should you care about lead paint?

1. Kids consume lead paint as it has a sweet flavor, and lead paint has long-term effects on children.  Lead doesn't leave your body.
2. When you renovate the lead paint dust that was generated from deteriorating lead paint, well it's lead-contaminated dust, and yes you are inhaling it, which means your children are inhaling lead. 
3. Hazard control is all about controlling your exposure pathway.  You don't want any chemicals where kids can come in contact with them, because you know chemicals are hazardous.   If you know where lead paint is in your home you are better prepared to manage it.
4. At Curren we recognize the risk of lead and care, so we discount the cost of lead paint inspections for residential sites to encourage people to perform the inspection. 

The contractor working on the lead paint must also be certified.

Any renovation, repair, or painting (RRP) project in a pre-1978 home or building can easily create dangerous lead dust. EPA requires that RRP (Renovation, Repair, Painting) projects that disturb lead-based paint in homes, childcare facilities, and preschools built before 1978 be performed by lead-safe certified contractors. Generally, EPA’s Lead RRP rule does not apply to homeowners doing RRP projects in their own homes. However, it does apply if you rent all or part of your home, operate a child care center in your home or if you buy, renovate, and sell homes for profit (i.e., a house flipper).

Learn About Lead Paint Inspection - 

Lead Paint FAQ

Lead Paint Inspections

The New Jersey Lead Safe law is making lead a concern for rental units, both tenants and landlords.    NJ’s New lead-based paint law went into effect on July 22, 2022, and affects ALL pre-1978 rental properties.   So if you are a landlord of a unit built before 1978 and you have not received a lead paint designation, you are subject to the law.  The law is also being called the Lead Based Paint Hazard Law.

How Can Curren Environmental help with compliance with lead inspections?

We understand common causes of paint deterioration and we will help you identify areas with problems (BEFORE WE INSPECT), it is essential to understand the cause of the damage to repair the paint. Our inspectors will talk you though what areas are common failures, which you can look for and address prior to inspection.     When Curren does inspect and if we find deteriorated paint, we will look for the cause of the deteriorated paint, so when you repair the issue it will not return.  Common causes of paint failure include:

Moisture damage
Friction and impact
Poor surface preparation

Deterioration of the building material

All single-family, two-family, and multiple-rental dwellings must be inspected.

This new lead law is being referred to as, New Jersey’s Lead Safe Certification and requires lead-paint inspections, visual &/or dust wipes on all nonexempt rental properties at tenant turnover or before July 22, 2024.  This means 1st inspection must be completed by July 22, 2024.   The inspections are perpetual. A lead-safe certificate is good for two (2) years but can last as long as three (3) years before a reinspection is needed if the tenant remains in the unit from the 1^st 2 years of issuance of the lead-safe certificate.

 What does the Lead Safe Certification lead law require of a property owner?

 If you rent a pre-1978 property that does not qualify for one of the exemptions, beginning July 2022, you will be required at a minimum to have a visual lead-paint inspection.  When we say the minimum, some towns have children with elevated lead blood levels, so units in these municipalities also require that lead dust wipe samples be obtained as part of the inspection.

Visual Inspection:  Just as at sounds like, visual lead inspections look for hazards.  How does one identify lead-based paint hazards?  Lead-based paint hazards is deteriorating lead-based paint peeling, chipping, chalking, cracking, or damaged paint. Lead dust can form when lead-based paint is scraped, sanded, or heated. Dust also forms when painted surfaces bump or rub together. Lead chips and dust can reside on surfaces and objects that people touch.

We examine all painted building components for deteriorated paint or visible surface dust, debris, or residue. We look for paint chips or dust from painting activities that were not cleaned up and paint residue on floors.

Where does the NJ lead safe certification require inspection be performed in a rental unit?

The initial lead inspection including subsequent periodic lead-based paint inspection applies to interior spaces within dwellings. This is interpreted to include any common areas that tenants of a rental dwelling have access to, including hallways and basements, in two-family and multiple dwelling rentals.   In short you are inspecting interior areas, exterior areas such as porches  are not part of the inspection. 

Who can perform lead inspections for rental units?

The lead inspection can only be done by  

1) Municipal local agency inspection program,  

2) NJ DCA-certified Lead Evaluation contractor hired by the municipality

Or

3) the property owner can hire directly a NJ DCA Certified Lead Evaluation contractor to provide the required inspection services. 

No matter who the lead licensed individual is, there is a fee for the lead inspection. The lead inspection fee is outside of the $20 fee the lead law requires the municipality to collect on a per-unit basis.

Visual Lead Inspections

Landlords can hope for the best outcome from the lead inspection, which is that no lead-based paint hazards are found during the inspection, and the local agency or the DCA-certified lead evaluation contractor can certify the dwelling unit as lead-safe on a form prescribed by the department of Community Affairs.

A failure of the lead inspection would be that lead hazards are found, then the property owner must address the hazard.   Properly addressed by means of either lead-based paint abatement or lead-based paint hazard control methods.   Additionally, if the lead evaluation entity (municipal or private) finds that a lead-based paint hazard exists in a dwelling unit upon conducting the inspection under this law, the lead evaluation contractor or permanent local agency shall notify the Commissioner of Community Affairs.

The photo below is a friction surface. Old door, multiple coats of paint and freshly painted.  When you open and close the door the door rubs, the newer white paint has rubbed off and an older layer of paint (green) is visible.  This would fail an inspection.

Lead hazards that are addressed require a lead re-inspection. Specifically, the lead law states that “upon completion of correcting any lead-based paint hazard identified during the visual Lead Safe Certification Inspection”, the Lead evaluation contractor or permanent local agency shall conduct a follow-up inspection (visual &/or dust wipes) of the unit to certify that the hazard no longer exists.  

The lead law places documentation and notification requirements on property owners. Owners are required to provide copies of all Lead Safe Certifications (per unit) and leases to the DCA inspector during their five (5) year multiple dwelling inspection.  Property owners are also required to provide copies of a current or newly issued Lead Safe Certificate to new residents specific to the unit they will be renting as part of the lease documents.

If a resident resides within the unit during the re-lead safe certification renewal cycle for three (3) years, the resident must sign a copy of the Lead Safe Certification.   This documentation must be maintained by the owner and made available during future DCA inspections.   Compliance is mandatory under the law failure to follow failure to comply can incur fines of up to $1000 per unit per week.

What to do to get ready for compliance?  Call Curren Environmental, we have been consulting on environmental issues in real estate since the 1990s.

888-301-1050

Do you think your property is exempt from lead inspections? The property must meet the following criteria: 

1. The property has been certified to be free of lead-based paint,
2. The property was originally constructed during or after 1978,
3. The rental unit is in a multiple dwelling that has been registered with the DCA as a multiple dwelling for at least 10 years either under the current or a previous owner and has no outstanding lead violations from the most recent cyclical inspection performed on the multiple dwelling under the “Hotel and Multiple Dwelling Law,”
4. Is a single-family or two-family seasonal rental dwelling that is rented for less than 6 months duration each year by tenants that do not have consecutive lease renewals; VRBO rentals fit this definition as long as the lease is shorter than 6 months per rental.
5. Dwellings that have been certified to be free of lead-based paint under N.J.A.C. 5:17-3.6(b).
6. The unit is owner-occupied.

Pro Tip

If you have not tested for lead-based paint and the property is pre-1978 original construction, the law states you must assume it is lead-based paint.

What is Environmental Due Diligence?

Environmental due diligence is the process that evaluates the environmental conditions and risks associated with a property. The process can be at the request of land developers, lenders, attorneys, or private owners who intend to purchase, refinance, or occupy a property.

The rub with performing environmental due diligence in real estate is buyers spend countless hours researching properties to purchase and when the right one is found, no one wants a delay or a cause a problem.

Environmental due diligence is essential for anyone looking to buy a property, whether commercial or residential. Hidden environmental liabilities are a massive problem you can face when purchasing a property that has not been evaluated for environmental due diligence; before making any large real estate transactions, make sure to understand the importance of this process.

When Is Environmental Due Diligence Required?

Lending institutions typically require environmental due diligence before they will finance a real estate purchase, refinance an existing loan, or accept collateral for a construction loan. If a cash buyer is involved, it is up to them to decide if a Phase I or other form of due diligence is necessary.

Who Benefits from Environmental Due Diligence?

Anyone purchasing a property can benefit from environmental due diligence, even if a lending institution is not involved in the sale. The process reduces the chances of someone purchasing real estate inheriting ecological concerns created by the former owners, it also provides an essential legal defense should issues arise.  Buyers get to know if there are environmental issues.  Sellers, although they typically would prefer a buyer not do due diligence, can avoid liability after the sale in the event contamination is found when a Phase I was not performed.  Lastly, lending institutions ensure that their loan is protected from contamination that can diminish the value of the asset.  A million-dollar property with a $400,000 cleanup is not worth 1 million dollars.

How Does Environmental Due Diligence Protect You?

Suppose environmental due diligence is performed before purchasing a property. In that case, the purchaser can gain protection from being held accountable for any pre-existing contaminations on the land according to the Comprehensive Environmental Response, Compensations, and Liability Act provisions. If this process is not completed, the new owner can be held responsible for repairing the contamination.

Buyers can also avoid being hit with the cost of environmental cleanup.   After completing tens of thousands of property transactions, the cleanup of sites is most commonly found when the current owner was lax in performing any environmental due diligence.     There are many properties that are being sold or planned to be sold that have been held by the owner for a number of years and they never did any environmental assessment of the property.  

What Does the Comprehensive Environmental Response, Compensation, and Liability Act (CERLCA) Require?

CERCLA establishes the process of determining who is liable for any hazardous substances on a property. Any property owners who are found to violate environmental due diligence can have to pay fines and fix the issues are their own expense, even if they aren’t responsible for the original contamination. Merely owning a contaminated property is enough to make you liable in the eyes of the law; this is why environmental due diligence is so necessary.

What is common Environmental Due Diligence?

The most common environmental due diligence is performing a Phase I ESA.  Phase I is an investigation into past and current ownership and uses of a property to assess the potential existence of hazardous substances or petroleum contamination on, in, or at a property.  It will even look at neighboring properties to see how they can affect the target property.   A Phase I ESA investigation is purely research and a site visit.  There is no testing during Phase I because you don't know if you have to test a site until Phase I is completed.   

There is a level of service you can expect from Phase I as they must be completed by an “environmental professional”.   The goal of the Phase I ESA is to identify recognized environmental conditions (“RECs”) that may affect the property or trigger liability for the buyer and determine whether further due diligence in regard to the RECs is appropriate.  Further evaluation can be Phase II or Phase III.  More about a Phase II & III can be found here  Phase II,  Phase III

A great resource with questions and answers regarding Phase I's can be found below. 

Phase  I  FAQ

Due Diligence Questions?  Call the Experts

888-301-1050

"Why would I have my home inspected or assessed for lead paint risks?"

1. Your child has been diagnosed as having lead poisoning. The most common home-based source of lead exposure is deteriorating lead-based paint which results in settled dust that young children can encounter.  
   
2. You live in a home built before 1978 where small children are or will be living.  Lead paint was banned nationally in 1978, some states banned lead paint earlier.
3. You are going to remodel, take down walls, enlarge a room, etc., anything that is going to disturb lead-based paint or generate lead-based paint dust and chips that can harm you and your family.
   

When buying a home, federal law allows the purchaser to conduct lead testing to determine whether lead-based paint or lead-based paint hazards are present. This is of particular importance if you have or plan to have young children in the home, but what type of lead inspection do you need, Lead Paint Inspection or Lead Paint Risk Assessment?

If you are concerned about possible lead exposure to you, your family and pets, or visitors, then knowing if a hazard exists and where is the first line of defense against the hazard. 

What is the difference between a Lead Paint Inspection (LPI) and Lead Paint Risk Assessment?

A Lead Paint Inspection (LPI) is a surface-by-surface investigation to determine whether there is lead-based paint in a home or child-occupied facility, and where it is located. Certified inspectors or risk assessors can only perform lead Paint Inspections. Lead-based paint inspections determine the presence of lead-based paint.  Lead Paint Inspections utilize an X-Ray Fluorescence device to establish the presence, if any, of lead-based paint. XRF units produce x-rays and allow the user to determine on-site if a surface contains lead paint.  Inspections by using testing equipment. It is beneficial in determining whether lead-based paint is present prior to purchasing, renting, or renovating a home, and identifying potential sources of lead exposure at any time.

A Lead Paint Risk Assessment is an on-site investigation to determine the presence, type, severity, and location of lead-based paint hazards (including lead hazards in paint, dust, and soil) and suggests ways to control them. Risk assessments can be legally performed only by certified risk assessors. A Risk Assessment does not have to test for lead as most inspections are performed with the presumption that lead paint is present.

You can also have a combined inspection and risk assessment.  With any of these options, the risk assessor or inspector will provide you with a written report of findings.

Lead Paint inspections determine if lead is present and where on the property.  A lead paint risk assessment presumes lead paint is present and assesses hazards associated with lead paint.

Lead Paint Inspection Procedure

The lead-based paint survey begins with inspectors/risk assessors walking the subject property and documenting room equivalents, testing combinations, and selecting test locations all while looking for lead-based paint. The walls/sides of the property are distinguished by Side A, B, C, or D. Wall or side A is facing the street, then moving clockwise would be wall/side B, C (located at the rear of the property), and D. After the testing strategy is determined, the inspector/risk assessor uses a Lead Paint Spectrum Analyzer (XRF) to determine the lead content (mg/cm2) of painted surfaces at the subject site.  Surfaces with paints or coatings with concentrations of 1.0 mg/cm2 or greater are considered lead-based paint. The inspection follows  EPA’s work practice standards for conducting lead-based paint activities (40 CFR 745.227), the U.S. Department of Housing and Urban Development (HUD) Guidelines for the Evaluation and Control of Lead-Based Paint Hazards in Housing (Guidelines), and all State and local regulations.

Lead Risk Assessment Procedure

Lead risk assessment entails a comprehensive visual evaluation of potential lead hazards, including lead-based paint, lead dust, lead in water, and/or lead in soil.  Testing can be completed as part of risk assessment. If you have questions regarding lead paint inspections please give our office a call.