Enviroassessors, Inc.



Real Estate Transfer Due Diligence









In the past, and to a great extent presently, property ownership transfers are based on fair market price, title search, and a termite inspection report.  The effect of environmental hazards and contamination on the value of real estate has been given significant attention.  It is well documented that environmental contamination can: 

·        Substantially reduce property value; 

·        Totally eliminate property value; and/or 

·        Result in a liability exceeding property value. 

Pre-purchase environmental evaluation (Phase I Environmental Site Assessment) of the property is the single most cost-effective way of protection.  Real estate assessment conducted with ENVIROASSESSORS expertise will make buying and selling property a solid proposition. 

The Superfund Amendments and Reauthorization Act of 1986 (SARA) has dramatically changed certain portions of a previous legislation under Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA)in the area of real property transactions. SARA recognized the fact that a landowner who had no connection with the release of hazardous substances at a property would still be liable under CERCLA. To remedy this problem, SARA provided an important defense, known as the "innocent landowner defense", which is contingent upon a defendant having had no reason to know a property was contaminated prior to holding title (42 USC § 9607(b)(3)(a) and (b)).

To establish an innocent landowner defense, SARA states that "the defendant must have undertaken at the time of acquisition an all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability". SARA further states that in construing the "all appropriate inquiry" provision, the courts will take the following into account:

  • Any specialized knowledge or experience on the part of the defendant;
  • The relationship of the purchase price to the value of a property if contaminated;
  • Commonly known or reasonably ascertainable information about a property;
  • The obviousness of the presence/likely presence of contamination at a property; and
  • The ability to detect such contamination by appropriate inspection.

What are the minimum efforts required to conduct an "all appropriate inquiry" to establish the SARA innocent landowner defense requirement?  Prudence suggests that most real estate transactions (especially commercial and industrial) be assessed for environmental impairment prior to consummation of a property transfer, to evaluate the risk of the transfer in light of potential environmental liabilities. 

Most lending institutions have established a policy requiring the performance of an all appropriate inquiry known as a Phase I Environmental Site Assessment, to establish the SARA innocent landowner defense requirement. 

Phase I Environmental Site Assessments give you an in-depth, comprehensive look into a property's past, present and future, particularly as they pertain to existing and pending environmental legislations.  ENVIROASSESSORS’ assessments give you a baseline for estimating what it will take in terms of money and resources to bring a property into compliance with environmental regulations.  ENVIROASSESSORS offers a breadth and depth of services that is unique in the industry.  Our responsiveness to your concerns, our expertise and our full range of capabilities give you the best possible combination of experienced hindsight and educated foresight.   Our highly experienced team and support specialists gather all the information relevant to environmental considerations, including for example, past ownership, operation and maintenance histories, and actions involving regulatory agencies.  On-site inspections conducted by experienced and specially-trained senior personnel include investigation of conditions known to be indicators of costly environmental problems and compliance with key regulatory programs, particularly those related to underground storage tanks, asbestos, PCBs, hazardous chemicals use/storage/disposal practices and others.  

ENVIROASSESSORS conducts site assessments for buyers, sellers, and developers of real property, and their brokers, attorneys, lenders, and insurance companies, who wish to minimize the potential liability involved in transferring or developing real estate that may contain hazardous materials.  Phase I assessments can be conducted alone.  However, if contamination is suspected or indicated, Phase II (environmental sampling) can be performed by ENVIROASSESSORS to confirm and identify the contamination.  If required, ENVIROASSESSORS is in a position to perform Phase III (remediation).