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ENVIRONMENTAL SURVEY UPDATE ARTICLES
ASSESSING THE
NEIGHBORHOOD: A GUIDE FOR AVOIDING PROBLEMS FROM NEARBY SITES DURING
PROPERTY TRANSACTIONS
In carrying out many of our recent real
estate-based assessments, a common question that has arisen is whether or
not environmental problems at a nearby site could delay the property
transaction. Specifically, potential purchasers have been asking: Can
a significant liabilities be present if I acquire a property next to or
near a site with known environmental problems?
The answer to this question is yes,
but with careful study and preparation, this situation does not
necessarily undermine the pending transaction. The key to successfully
working through "nearby site" issues is to keep in mind the fact
that there can be significant risk in acquiring properties
adjacent to or near sites with environmental problems, even if those
problems are documented and known to be the responsibility if another
party. Therefore, as a potential buyer of a nearby property, you must take
the proper measures to protect your interest during the due diligence
period.
The presence of contamination at a nearby
property can affect the value of your site in several ways. Primarily,
there may be direct or indirect exposure pathways by which the
contaminants of concern can affect residents or tenants of your site. This
can include the presence of active potable or process water wells which
allow exposure to the contaminant, or a basement which may have vapors
from an off-site volatile contaminant in soil or groundwater, such as PCE
or gasoline. Additionally, an off-site impact can often extend onto the
subject site above state or federal action levels, which places the owner
of the subject property at risk of being involved in the eventual cleanup.
Such frightening scenarios, while rare, have actually occurred when the
parties responsible for the nearby site cleanup default on their
responsibility to complete agency-mandated investigations or remediation
through bankruptcy or other factors.
If you are looking into a property, but
are aware of a potential off-site source such as an adjacent service
station or a federal cleanup site down the street, you must take certain
steps before proceeding with the property transaction to protect yourself.
First, you and your consultant should identify the nature and extent of
the problems from the off-site source which could represent direct or
indirect exposure pathways onto the subject site. This is performed
initially through a database screening which is a part of RT's standard
Phase I Environmental Site Assessment work scope, but can also be
performed separately. Regulatory agency file reviews can also be
conducted, which often provide detailed information regarding the nature
of investigation or cleanup activities at a site. Once this information is
obtained, an assessment of the responsible party's plans and/or ability to
carry through the required environmental work should be assessed through
discussions with the overseeing state or federal agency.
These initial steps often lead to
satisfaction on the part of the potential property owner, and provide a
more solid footing on which the transaction may proceed. If such initial
measures are not taken, these issues run the risk of ending up in
litigation, to the dissatisfaction of all parties involved. It is
therefore best to foresee these potential circumstances early within the
due diligence period, and approach them intelligently throughout the
transaction process.
We at RT can help you use these screening
tools and our experience to help you identify these problems before they
delay your transaction. Don't hesitate to call Gary Brown at (610)
265-1510 or Tom Brady at (856) 467-2276 and we'll be happy to discuss your
upcoming transaction and any associated environmental concerns.
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