Enviromental Phase 1

[AJ Ard]

Looking at a hotel property to due a private loan. Phase 1 Study did not inspect units for radon, asbestos, etc. Underground storage tanks were discovered from 1980's. Owner has estimates to remove tanks from licensed contractor. Phase 1 recommended phase 2 be done. Trying to get feel for frequency of environmental studies done on commercial properties and if phase 2 done specifically for underground storage tanks would additional study need to be done on individual structures?

Would any lender not require phase 2 in similar situation?

What would be considered a clean environmental report on this property?

Also would be interested in any answer to lender liability for clean up if needed?

[Travis Meils]

I was required twice by a lender to do a phase 2 for two different properties. Both had history that triggered this. One had the tank that was removed and the owner had an NFR but they still required the phase 2. Everything went well and we currently own the building. The other building is currently under contract and we plan to exit if the next set of results come back negative. Phase 2 is very expensive and can last years. Each boring has cost well over $5000. We only financially participated 50% in the first boring. The Phase 2 has reached its 3rd boring. The cause of the contamination was from the neighboring building that was previous a dry cleaning business that leaked perk. Most likely remediation will be required. There is no more super-fund available to assist in the clean up. The cleanup with take a minimum of 18 months and cost $80k +. A major concern is if the contamination goes onto from the property under contract to a different neighbor's property because the owner of that property can become liable to the neighbor even though it did not originate from his property. Needless to say but if your required to go into Phase 2 hold on to your seat and do your best to put the Phase 2 financial responsibility on the owner. I hope my experience can spark an idea for you.