All Forum Posts by: Lawrence P. Schnapf

yes- just this week, i've reviewed four loans for multi-family properties that have contamination from prior use that was remediated. lender just needed help understanding risk. 

BTW- many heating tanks were installed in the 70s when people were concerned about oil shocks. 

Many home oil tanks are unregulated because they are too small. happens alot of time. quickest thing to do is take some samples in the area of the tank during your diligence period. The good news is that heating oil tends not to migrate too far. In addition, if the area of Houston has a Municipal Setting Designation, you can ignore groundwater impacts. Reasonable worst case scenario is usually $15K to $25K depending on size of tank and depth of contamination. If the tank is near the house, there are limits on how deep you can dig without undermining structure so this will act as a ceiling on cleanup costs as well. 

depends partially if you're going to remove the existing paint. if so, it might contain lead depending on age and would require special handling...

while reviewing past phase 1 reports can help the historic discussion/research  it would not from a practical standpoint save much $$. The consultant is still required to do a site visit and current database search.  

Ian C was suggesting what is known as a ASTM E1528 Transaction Screen. Most banks will not accept anything less than an ASTM E1527 compliant Phase 1. It would be a waste of your $$ to do this unless your lender would accept. But the price difference is not significant enough to push for this option. and it would not provide you with liability protection.

nothing should be automatic. the consultant is supposed to determine if based on the site inspection and site history if there are conditions suggestive of a release or spill of hazardous substances. The presence of an old heating oil tank, a business that used cleaners coupled with septic system or dry wells could suggest this possibility. 

There are phase 1 "mills" that have independent contractors who get hired for $500 to inspect a site. they order a records search for another $500 and then the firm adds about $700-$1000 so it can make a profit. the inspectors are often inexperienced, often times have failed at something else, and are doing this to pay their gas bill or buy a couple of beers. Sometimes they miss things and other times they make mountains out of molehills.

then it depends on the risk tolerance of the lender. some just view the phase 1 as something to check off the list. others, though, want to eliminate any possibility of a historic spill and so will want a phase 2 at the slighest suggestion of uncertainty.

do you know the name of the consultant who will be doing the lender's phase 1? 

do you know how the property has been heated in the past? if there was a heating oil tank, it could have leaked in the past. Cleaning products that are thrown into dumpsters can sometimes leak when rain percolates through dumpsters. are there dry wells on site or septic system? these are all possible sources. if none exist or existed in the past, then you will probably get a "clean" phase 1. 

Of course, some consultants that work for banks do low bidding to get job and then try to find problems so they can charge for phase 2.

First- what is the current use of the property and what was its historical uses? There are many uses besides dry cleaners or gas stations that can pose environmental risks. 

You actually should want to do a phase 1 since it could help you assert a defense to liability if a neighboring property has impacted your property. 

A phase 2 is usually only recommended when the consultant believes there may be an environmental issue that has not been resolved or if there is reason to believe an off-site source may be impacting the site you are considering acquiring. 

make sure you have the right to rely on the phase 1 report since you will be paying for it anyway.

there really is not a publicly-available database for phase 1 or phase 2 reports unless the information was shared with a regulatory as part of a voluntary cleanup. The database companies have electronic platforms but they are supposed to be secure and not available to third parties. 

I would not jump to the conclusion that simply because a 25-year old report found elevated vapors means the property today poses a risk to human health and should not be purchased. The conditions of the sampling may not have been representative of actual conditions, vapor intrusion is highly irregular by time and within a property, can be influenced by weather/temperature, and the source may have been removed or the contamination may have degraded.  Obviously, each client has different risk thresholds but a new phase 1 would certainly make sense to determine to see if conditions flagged 25 years ago still exist -especially if the client otherwise really liked the deal.   

The only old phase 1 reports that tend to be electronically available are those produced for government or public agencies. Privately-commissioned phase 1 reports are generally only available from the property owners. Consultants usually ask for any reports that a seller or borrower might have in their possession. If you know who the consultant was that did prior reports for the site, you can ask them but they would need permission from their client (property owner. lender, etc).

You of course have to very careful about relying on old reports. The standards for what should be in a report has changed-particularly on agency file reviews, historic USTs, vapor intrusion and even what constitutes a REC. Since 2013, we have new definitions of CREC or HREC.