By now, most real estate professionals with a few years of experience have a basic understanding of what is included in a Phase I Environmental Site Assessment.  The basics include: 1) site reconnaissance, 2) historic records review, 3) government records review, and 4) report.  Then within each of the 4 areas listed above, there are multiple tasks that may or may not need to be reviewed based on the American Society of Testing and Materials (ASTM) guidelines, EPA’s All Appropriate Inquiries (AAI) requirements, and the purpose of the Phase I ESA report.  With those facts in mind, here are the top 3 myths encountered when speaking with Phase I ESA clients:


Myth #1 “Phase Is always include Asbestos & Lead Based Paint Assessments.”

Actually, the ASTM guidelines specifically exclude asbestos containing building materials and lead based paint from the Phase I assessment.  The ASTM guidelines also exclude:

  • radon,
  • 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. 

Depending of the capabilities of the environmental firm you are working with, many of these items can easily be added to a Phase I for an additional cost.

Myth #2 “Recommendations are a required part of the Phase I.”

In fact, the recommendations section is the only optional portion of the ASTM Phase I document and is typically included in the report, unless their removal is requested by the client. There is usually no additional cost for inclusion of recommendations in the lump sum fee.

Myth #3 “All commercial real estate transactions require a Phase I.”

Although most environmental consultants wish this was true, it is not.  Phase Is are typically driven by the banking industry.  For example, many banks require Phase Is prior to approving a property or SBA loan.  Also, if the intent of a Phase I report is to limit CERCLA liability, a Phase I completed to AAI standards is required for the CERCLA innocent landowner defense.

It should also be noted that a fairly standard definition of a commercial property includes residential structures/properties that are comprised of 4 or more residential units.

So as you can see, not all Phase I reports are the same!  Phase I ESAs can be tailored to specific clients: some clients always request a summary of radon information, another may request ‘lead in drinking water’ analyses, and a third may require completion of a concurrent biological assessment.  What’s the bottom line?  All clients are diverse and should be informed of all their options!

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