Why a Phase II Environmental will Sell A Property?

Apr 20, 2026 8:15:00 AM / by David C Sulock posted in Phase I, Environmental Site Assessment, AAI All Appropriate Inquiries, Due Diligence, Phase II, Phase I ESA, 1031, ASTM E1527-21, Phase II Costs

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Environmental property inspections started with Superfund. The first standardized Phase I Environmental Site Assessment (ESA) was published by the American Society for Testing and Materials (ASTM) in 1993 as ASTM E1527-93. While informal environmental audits emerged in the 1980s following the 1980 CERCLA/Superfund legislation, the industry-standardized practice was formally developed to meet "all appropriate inquiries" requirements desired by lenders.

In theory, commercial properties bought and sold since the 1990’s would have had a Phase I or Phase II completed. Since Phase I has a shelf life of 180 days or 6 months, many properties would have had a few environmental inspections under their belt. Following this logic, as long as the operation of the property did not have an environmental impact to the property, subsequent inspections should not encounter issues.

Unfortunately, what I wrote is wishful thinking; environmental evaluations have gotten better over the years, and it is fairly common to find that older reports missed things. 1030 exchanges often circumvented environmental due diligence and old school purchases (read we did no environmental) side-stepped a Phase II ESA and therefore missed any Phase II testing. Curren Environmental is coming across an endless stream of properties that have never had environmental inspections performed, due to negligence. These sellers are taken back by buyers who want environmental inspection and associated testing. The rub is in today’s environment, lenders and buyers require environmental inspections, and anything that is found is the responsibility of the seller, even if historic contamination is found that was caused by a long-gone owner/operator of the site.

Environmental regulations are unfair and place environmental cleanup on the owner of the property, not the one who caused the contamination. Of the sites we come across with contamination, the owners who step up and address their obligation, however unfair, get their properties sold faster. The owners who bury their head in the sand, drag out transactions, and buyers walk away.

Bottom line, if the property you are selling doesn’t have a recent Phase I or has never had recommended Phase II testing, you would be best served to get ahead of things and complete an environmental evaluation. The huge advantage of this approach is that you will sell the property faster. You can also price the property sale, taking into account the money you spent on environmental evaluation and cleanup. You can’t do that after a property goes under contract.

If you have real estate-related environmental questions, Curren can provide answers and guidance.

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Trust, but verify, when it comes to environmental issues.

Oct 14, 2025 9:45:00 AM / by David C Sulock posted in AAI All Appropriate Inquiries, OIl Tank Sweeps, Due Diligence

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Recently, we received an email from an associate in the real estate industry.

“I have a client purchasing a home built in 1988. The sellers stated that the prior owner mentioned a tank was removed before they bought the house. They don’t know if it was oil or propane. I requested an OPRA report, but am waiting for it to come back. Is it even possible for a home built in 1988 to have had a buried tank? The home inspector also noted evidence of prior oil heat but stated that searching for hidden or removed tanks is outside the scope of their inspection.”

Our Response

Yes — it’s 100% possible and, in many cases, likely. Most likely, the tank was an underground oil tank, although propane is possible if natural gas wasn’t available at the time. We’ve seen homes built as recently as the early 2000s that originally used oil heat.

After obtaining the property address, we determined that the home did have an underground storage tank (UST) removed, and it had leaked, resulting in an NJDEP case number.

The OPRA (Open Public Records Act) request provided minimal information — only that a 500-gallon UST was removed in June 2014. Many people expect an OPRA to include detailed reports or test results, but it rarely does.

A “glass-half-full” person might assume the tank didn’t leak.

An experienced environmental professional would say: “Show me the documentation proving the tank did not leak.”

The Investigation Continues

Upon further review, we discovered that Curren Environmental had actually performed the remediation work years prior. (With thousands of projects completed annually, not every address immediately rings a bell!)

Fortunately, we were able to provide the NJDEP No Further Action (NFA) letter needed for the real estate transaction.

The Problem

The seller had no knowledge of the NFA or that it even existed. They only knew a tank had been removed — and some believed it was propane.

This is a perfect example of why, in real estate, you must trust but verify. Always confirm that what’s presented is accurate and supported by documentation before relying on it.

A Less Happy Ending

Not all cases end this smoothly. In another instance, we performed a tank sweep for a buyer on a beautifully renovated home listed at a premium price.

Our geophysical scan didn’t find a tank — but it did reveal groundwater monitoring wells, which typically indicate a history of contamination. Further research uncovered that the property once had an oil tank that leaked and was never closed out with the NJDEP.

The contamination had not been disclosed, and the sale fell through. One year later, the home still hadn’t sold and was being rented out. In this case, the seller — a flipper — had purchased and renovated the property without doing proper environmental due diligence, tying up significant capital in a contaminated property.

The Takeaway

Inspectors in New Jersey are not required to search for buried or removed tanks — but your clients rely on you for guidance. Recommending a tank sweep or environmental history review can protect your client from costly surprises and protect your reputation as a trusted professional.

Even honest sellers may be unaware of past tank leaks or remediation. The only way to uncover these issues is through Buyer Due Diligence — verifying records, performing scans, and reviewing NJDEP data.

Final Thought

When it comes to environmental concerns in real estate: Trust, but verify. Always do your due diligence.

Finding Mold during a Home Sale

Jul 28, 2025 3:00:00 PM / by David C Sulock posted in mold, mold remediation, mold cleanup, mold contractor, Mold Testing, Due Diligence, mold survey, mold assessments, mold professional, mold expert, Mold, Mold growth, mold remediation, Indoor Air Quality

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The term "mold" correlates to fungi (although not all fungi form molds, some form mushrooms), and mold is often called mildew (because "mildew" sounds better than "mold"). No matter what you call it, finding mold during a real estate transaction is a negative. How you manage mold can have a huge impact on the real estate transaction.

To be clear, mold is a known indoor air contaminant and a health hazard, underscoring a bigger issue: a water issue that can be destructive to building materials. mold culture

The health concern can give an out to a buyer, as the home can be viewed as uninhabitable. A failed sale also red ones the property as having some issue that caused it to fall out of contract. Relisting the property means disclosing the mold growth and any other defect noted from the buyers’ inspection.

Those are some of the negatives, so let’s flip the coin to the positive side. Finding mold means confronting it head-on. Determining cause (Was it fixed? Is it defined?), fixing the mold (remediating to whatever extent necessary to bring the indoor environment to a normal fungal ecology), and lasting documenting these facts to the buyer. In short, you are defining and addressing, for lack of a better term, the cancer. Fixing the issues solves the issue. I can freely say that after 30-some years of environmental consulting, I have never said Do Not Buy that property because of mold.

So, how do you manage mold in a real estate transaction?

When mold is found or suspected, assess what you know at that point.

1 Do you know the cause?

2 Do you know the source?

3 If you do not know 1 & 2, you do not know the cost to address.

4. Do you know if mold is anywhere else?

If you can't answer 1 through 4, you need to take steps to answer the questions. Understand if an inspector notes mold in an attic, unless it was a paid inspection, you will not have the data to answer these questions.

Photo Nov 15 2018, 9 42 08 AM This utility room houses HVAC equipment, a water heater & a washer and dryer. There are three typical causes of mold in this room. Mold was found; do you know where, the cause, and the fix? We did.

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This leads to having a professional mold inspection performed. Yes, there are specific paid inspections to evaluate a property for mold. Did you know you can test for mold and evaluate the fungi found, which helps unlock the driver (cause) of the mold was. Yes, different molds need different conditions to grow.

Keep in mind that unless a mold inspection was contracted as part of the purchase due diligence, meaning that in addition to your home inspection, radon testing, termite, piling inspection, engineering, roof, pool, septic, etc., then mold was not specifically looked for, but it was noted by an inspector or a relative with a keen eye. This drives you to needing to get a professional involved.

What can you expect from a professional mold inspection?

Confirmation that mold is or is not present.

Evaluation of the causes of the mold and the extent of the mold. Yes, mold can have multiple causes.

Lastly, a budget to address the mold (remediate) and repairs that may have been missed to prevent the mold from returning.

It is not uncommon that after the mold inspection is completed, the real estate settles, either before of after the mold is remediated. Yes, it is common that there is not enough time to address the mold before settlement. We are seeing payments to environmental companies directly from settlement accounts (title Company), which ensures the mold is addressed. Reading between the lines here is telling, for buyers and lenders to proceed to settlement when mold is not addresse,d is saying there is a comfort level about the mold being addressed.

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What can you expect from a professional mold inspection?

How a Phase I Sells Real Estate

Jun 30, 2025 3:15:00 PM / by David C Sulock posted in Phase I, Due Diligence, Phase II, Phase II GPR, 1031 Exchange, ASTM E1527-21, Phase II Costs, What does a Phase II cost?

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Use your Environmental card to sell real estate faster, by card I mean having a Phase I completed as a selling feature. Never thought about having a Phase I sell a property? Read on my friend.

Environmental due diligence is a mainstay of real estate transactions; it doesn’t matter if it’s residential, commercial, or industrial, but it is typically the last task completed. I know this from 30-plus years of real estate transactions. Sellers and their representatives do not want to take the first step forward in evaluating a property for environmental issues. This phenomenon is commonly referred to as the ostrich effect. Sellers wait until the buyer pulls the proverbial environmental trigger, shocking the seller that something was found, or the seller being surprised that environmental due diligence was even performed. Don’t believe me, ask any realtor about environmental due diligence they had to face in a transaction, and the delays it caused.

On many sites, the sale grinds to a slow crawl while the seller digests the problem and the cost to address it. Some buyers hang on waiting for work to be completed, but to say work can take a few months for some issues can push buyers to the next property. I had one that was going on for 10 months, the buyer just had to walk due to the length of time. Photo Jan 26 2023, 10 48 14 AM

You want a fast closing, do your environmental due diligence before the property is listed. For a residence that can include a tank sweep and mold inspection, as these are the common environmental issues in homes. On commercial properties, perform a Phase I. Think of it as a sales brochure on the property. You may already have one from when you bought the property. Since they are only good for 6 months to a year, a fresh Phase I is needed. Maybe you never did a Phase I and hope a buyer will follow suit. Don’t count on it, that is the whole point of this exercise is to anticipate what environment will be needed to allow the sale to go through.

Your best case is that Phase I finds no issues, which is a huge selling feature for buyers. It makes your property more appealing than competing properties, because the OTHER properties have an undefined environmental status. What property do you want? The one with the questions answered or the one with questions?

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I will even turn the page to a Phase I finding an issue, and now a Phase II is needed, meaning testing. This is when many buyers stop the sales process because they have already spent money on inspection and do not care to test a property; they do not want to find something the owner may not address. A Phase II, when necessary, is the slam dunk step for a seller to undertake. If no issue is found, you are done. If an issue is found, well,l you have all the time to address it before a buyer comes along. Matter of fact, after 30+ years of performing environmental due diligence, I can say with 100% certainty that sites that have had environmental completed before a property is listed for sale, sell faster and for more money.

Being forward-thinking and looking for environmental issues BEFORE a buyer comes along may seem counterintuitive, but it’s not; it’s being proactive to put the property in the best light possible.

How can you scan a property for an oil tank if you have never removed one?

Jan 27, 2025 12:00:00 PM / by Tiffany Byrne posted in OIl Tank Sweeps, Due Diligence, NJDEP Unregulated heating Oil Tank program, tank scans, tank sweeps with GPR, gpr tank scan

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Oil tank sweep inspections are gaining traction, leading to a surge of small companies equipped with metal detectors touting their professionalism. But can they truly deliver?

At Curren, we've encountered numerous oil tank sweep companies and reviewed their reports, often with disappointing results. In many cases, these one-person shops scan for an oil tank and provide a report that recommends “oil tank removal”, which requires a few weeks to ramp up to perform with permits and utility mark out. On the day of removal, it turns out to be little more than a sham, involving no oil tank in the ground at all. Unfortunately, clients are left feeling deceived, as their money is used for the tank removal, with no oil tank removed from underground. All the while, the real estate transaction is stalled.

It's time to choose a trustworthy partner for your tank removal needs—make informed decisions to protect your investment. What makes a great oil tank sweep inspection company? A company that removes oil tanks—one that knows oil tanks inside and out.

Tank Sweep Fail Ironsand

Oil Tank Sweep Fail. The company said there was an oil tank. No tank was found.

Many inspections are performed when buying a home, and most are cursory visual inspections of the HVAC system, soffits, chimneys, foundation, plumbing, sidewalks, decks, swimming pools, etc. These building components are commonly evaluated as part of your home inspection. What is missed by many buyers is the environmental liability aspect of purchasing a home. Environmental can be asbestos, radon, mold, lead paint, and oil tanks. Of all these environmental liabilities, oil tanks represent the biggest risk relative to remedial costs. A hidden underground oil tank can cost a couple thousands of dollars to a new homeowner if it's not caught during the inspection process. Worse is when an oil tank leaks, which can lead to costs in the tens of thousands of dollars.

If you're considering whether to get an oil tank sweep, remember this: when you decide to sell your home in the future, potential buyers may request one. Taking care of it now can save you stress and help you avoid surprises later. Over the past 30 years oil tank sweeps, oil tank scans, and/or oil tank inspections have become a common part of the home-buying process.

Why perform an oil tank sweep?

Oil Tank Soil Remediation Oil tanks belong to the property and if you buy a home with an oil tank you purchased all the costs associated with the oil tank, including oil tank removal, soil testing, and the most expensive part soil remediation (if required).

Oil heat was popular in the Northeastern United States from the 1930s to the mid-1980s, this time frame encompasses a large part of the homes in the Northeast, meaning chances are the home you are looking to purchase utilized oil heat in the past. Also, homes built before 1930, most likely had oil heat. since coal was phased out as soon as a homeowner had a chance to switch, since coal required physical feeding of the furnace several times a day during the heating season.

What percentage of tank sweeps find prior oil heat?

With over 30 years of experience with oil tanks, we have crunched the numbers and found an average of about 75% of the oil tank sweeps find evidence of prior oil heat. That number should not be that surprising since natural gas really only became popular in the 1970s.

Who pays for the oil tank sweep?

Buyers typically pay for the oil tank sweep as it is part of their due diligence. Due diligence is what a reasonable person would do to investigate a property for problems prior to ownership.

Do property owners ever do oil tank sweeps?

Most property owners do not perform oil tank sweeps as they do not want to find an oil tank.

Oil Tank scan with Ground Penetrating Radar (GPR) or metal detector?

You should use both GPR and a metal detector to be thorough when performing a tank scan or oil tank sweep. Rely on GPR the most as it is what commercial sites use, metal detectors are more to prove that the object found by GPR is metallic. Remember, the best equipment is the most expensive, an $800.00 metal detector on Amazon.com should not be relied upon.

Ground Penetrating Radar Metal detectors beep if they find iron sand (a real thing), buried pipes, get too close to a metal fence or a structure with metal (yes homes have metal) or simply encounter buried metallic trash. GPR uses a screen so the geophysical technician can see the graphical image detected by the GPR antenna. Larger signals are tanks, smaller signals are usually pipes.

Should the oil tank scan company perform removals?

Yes, the oil tank scan company should be responsible for removing oil tanks. This is because their technicians are well-versed in identifying underground and aboveground oil tanks, as well as recognizing other potential structures. Curren has been contacted by many clients who have hired oil tank scan companies and discovered anomalies or tank-like structures on their properties. These clients often request either a Ground Penetrating Radar (GPR) scan to further investigate or an immediate tank removal. The cost for tank removal typically exceeds $1,000, and in many cases, no actual tank is found. Instead, there may be large rocks, sewer lines, clay deposits, iron sand, or other materials that resemble a tank structure.

Oil Tank Removal Curren

How long does a Phase I ESA take?

Jan 9, 2025 10:45:00 AM / by David C Sulock posted in Phase I, AAI All Appropriate Inquiries, Due Diligence, Phase I ESA, ASTM E1527-21

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Phase I Environmental Site Assessments (ESAs) are typically completed within a 2 to 4-week period. However, the duration can extend if the property has a complex history or if the consultant encounters any challenges during the assessment process.

A Phase I ESA is generally considered valid for one (1) year from the completion date, according to ASTM standards E1527-13 and E1527-21. It's important to note that regulations may vary by state and municipality, with some jurisdictions recognizing a Phase I as valid for only 180 days.

The typical timeline for a Phase I ESA is two (2) to four (4) weeks. At Curren, we purchase historical records, which we usually receive within a week. When requesting public records (under the Open Public Records Act, or OPRA) from local towns or counties, we can expect a response within up to seven (7) business days. In New Jersey, for example, the law stipulates that a government agency must respond to an OPRA request no later than seven (7) business days after receiving it. Requests sent via email usually result in faster responses than those sent via mail. Day 1 of the response time starts the day after the custodian receives the request.

We initiate the owner interview and questionnaire a few days after we receive the records to ensure progress. This step is essential, as it helps us understand what the owner knows or is willing to share about the property’s history and operations. If the owner conducted a Phase I assessment when they acquired the property, we will request that report and include it in our research.

We aim to conduct a site walk within a week of receiving authorization to proceed. Ideally, the owner would have met with us for an interview, provided any old reports, and completed our questionnaire, which would allow us to be well-informed about the property before the site walk.

By day 10 (or two weeks in), we should have all necessary research and government records to compile the report. During the third week, we draft, review, and send the report to the client in an ideal scenario.

In less than ideal situations, the timelines can be extended due to various factors, such as:

- The owner not providing access to the property

- The owner declining to participate in an interview

- The owner failing to complete the questionnaire

- Delays from the government in processing our records requests

Any of these scenarios can delay the final report. A complete Phase I must adhere to ASTM standards, which require that all aspects be thoroughly addressed. Some consultants may rush an incomplete Phase I to meet a client’s deadline and offer a caveat that any missing information will be provided in an addendum report; however, this creates significant data gaps.

At Curren, we prefer not to issue a report that does not fully comply with ASTM standards, as that would render the Phase I incomplete. This is why we provide a range of time for report completion. The Phase I process and timelines stated here should be standard across any company performing these assessments.

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Due Diligence on Foreclosed Properties

Jan 4, 2025 9:45:00 AM / by David C Sulock posted in Phase I, Property Transaction Screens, AAI All Appropriate Inquiries, Due Diligence, Phase II, Phase I ESA

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Foreclosed or bank-owned properties represent a good value as they allow you to purchase a depressed asset. Unfortunately, bank-owned properties provide little owner knowledge of the property and may have restrictive time frames for due diligence. Many of these properties are purchased with little to zero professional due diligence for the buyer.

After purchase, a boomerang effect occurs where the buyer or flipper improves the property and lists it for sale at a premium price. Prospective buyers will conduct due diligence that the previous owner may have overlooked and may uncover issues that the owner was unaware of.

Do foreclosed properties need due diligence

We have a small school that was closed after being foreclosed upon by the bank. The bank had no prior environmental knowledge of the property. The new buyer viewed the school as low risk from an environmental standpoint. They purchased the school with cash, thereby avoiding the need for a mortgage that would have required a Phase I Environmental Site Assessment. Now, the new owner wants to renovate the building and needs a bank loan to reimburse themselves for the purchase and to provide funds for the renovation.

However, the bank requires a Phase I assessment, which has identified multiple Recognized Environmental Conditions (RECs). RECs are issues or potential issues that need further investigation. The owner is frustrated because any testing could uncover problems for which they bear no responsibility, yet they would still have to bear the costs of addressing those issues.

The owner decides to list the property for sale instead and of course finds a buyer who also does a Phase I, which again finds RECs that require investigation. Do I need a Phase I on bank owned properties?

Today, the property owner called Curren regarding their property. Curren had previously provided a quote for a Phase I Environmental Site Assessment before the owner purchased the property. After the purchase, we also quoted a geophysical assessment. However, the owner decided not to conduct any of this due diligence.

They made a layperson's decision, believing that the property was low risk and did not require any environmental assessments.

The current owner consulted a lawyer to explore any potential relief, but unfortunately, there are no options available. In summary, the owner has already spent $50,000 on environmental issues.

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What is the Difference between a Phase I and a Preliminary Assessment?

Nov 28, 2023 10:46:00 AM / by David C Sulock posted in LSRP, Phase I, AAI All Appropriate Inquiries, Due Diligence, Phase I ESA, Preliminary Assessment

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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.

what is a preliminary assessment

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.

Levels of Due Diligence in New Jersey-Do I Need a Phase I AND a Preliminary Assessment?

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.

3. A Preliminary Assessment will include recommendations for a Site Investigation of Areas of Concern (AOCs). A Phase I does not require recommendations for further investigation.

Can you combine a Phase I & Preliminary Assessment?

The short answer is yes you can develop a Phase I - Preliminary Assessment report, If you’re performing real estate due diligence in New Jersey and want to qualify for both federal and state innocent purchaser liability protections, you need to perform both an ASTM Phase I ESA, as well as a NJDEP PAR

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.

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IMG_4209-3

No testing is performed during the typical PHI and PAR. The sampling would be performed during the PHII ESA or Site Investigation phase.

Phase I ESA Tips aka The Best Phase I

Nov 15, 2023 11:49:00 AM / by David C Sulock posted in Phase I, AAI All Appropriate Inquiries, Due Diligence, Phase II, Phase I ESA, Phase II GPR, ASTM E1527-21

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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.

dumping

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.

Best Phase I ESA Choosing a company for a Phase I

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.

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Preparing for a Tank Sweep

Oct 4, 2023 12:17:00 PM / by David C Sulock posted in Due Diligence, tank scans, tank sweeps with GPR, tank sweep, gpr tank sweeps, gpr tank scan, tank leaks

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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.

Oil burner switch Oil burner present Copper lines

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.

oil fill cap lClUW0yuSZuqaJQmdD7CjA[1]

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.

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.
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.
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.

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

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

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

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