If you are in the market for vacant land, getting an environmental assessment before you buy can help ensure you don’t end up owning a serious environmental or clean-up problem. Especially if you are buying a large parcel in a non-residential area, (such as a rural, industrial, or commercial area) you are taking a large risk if you complete the purchase without first performing an environmental assessment.
As the owner of a piece of land, you become responsible for cleaning up any contamination found there, whether it was discovered by you or perhaps later, during a buyer’s environmental assessment if and when you try to sell. The fact that your use didn’t cause the contamination won’t help you at all.
To avoid such potential liability, you must find out the environmental condition of the land before you buy. An environmental assessment is meant to determine whether the land has any environmental issues such as contaminated soils or polluted water sources.
If the assessment reveals environmental problems, you can require that the seller resolve them before you buy. If the issues are too problematic, you might decide not to complete the purchase.
A professional environmental assessment is typically performed by an environmental engineering company, according to standards set by the U.S. Environmental Protection Agency (EPA). Various levels of environmental assessments are available (at various degrees of expense).
A phase I environmental site assessment (“Phase I Assessment”) is the most common, and is usually sufficient for vacant land. The engineers will use observation and historical data to assess the likelihood that any hazardous substances (including petroleum products) are present on or adjacent to the land.
If the results of the Phase I Assessment raise contamination concerns, the engineering company might recommend further steps, such as performing a phase II environmental site assessment (a “Phase II Assessment”).
One of the first things investigated during a Phase I Assessment is the physical state of the land. The engineers will walk through the property, looking for any evidence of wells, chemicals, spills, or anything else that might indicate previous use of contaminants. If, for example, the physical inspection reveals a gully out in the woods scattered with, old, empty pesticide barrels, this would be a red flag indicating that a previous owner might have contaminated the land.
A Phase I Assessment also usually involves a review of the historical records and other evidence relating to the land’s prior uses. For example, if a Phase I Assessment reveals that a gas station previously existed on the land, the Phase I report might advise a Phase II Assessment to test the soils for petroleum contamination.
A Phase I Assessment also typically includes a search of state and federal environmental databases. These may contain information about previous environmental violations or environmental incidents relating to the land and adjacent properties. If the database shows a report of a previous chemical spill on the land, for example, you’d want to look deeper to determine whether a thorough clean up ensued. Or, you might order soils tests to find out whether the land is still contaminated.
Interviews with current and previous owners of the land and adjacent properties are another tactic commonly employed during a Phase I Assessment. Sometimes, previous uses not apparent on inspection or discovered in the records are revealed during such conversations. The more information about the property, the better.
A Phase I Assessment also typically includes a review of any previous site plans for the property.
Additionally, detailed photographs (possibly including aerial photographs) of the land are usually taken and reviewed during a Phase I Inspection. These might reveal evidence of use or contamination not otherwise easily detectable. For example, an aerial photograph might show soil discoloration in one part of the property, indicating a chemical spill or other problem in that area.
A completed Phase I Assessment includes a report summarizing any potential environmental problems found on the land, as well as recommendations relating to how to proceed with any potential problems discovered.
To be fully informed, you must review and discuss the report with the engineering company or an experienced environmental attorney. If further investigation is recommended, you might decide to order further testing, such as a Phase II Assessment.
A Phase II Assessment goes a bit deeper into the condition of the soils, air, and water on the piece of property. Any potentially contaminated areas identified in a Phase I Assessment are likely to be investigated further. The Phase II Assessment involves taking and analyzing soil, air, or water samples. The results of these tests help determine the extent of contamination and any needed remedial steps, such as soils clean-up or water decontamination.
Because environmental problems can be serious and expensive, you must ensure that your purchase contract includes the right to perform an environmental assessment before completing the purchase.
If the results of any environmental assessment reveal problems, the contingency must give you the option to either require the seller to remedy these to your satisfaction or to back out of the deal altogether (and get back your earnest money deposit). Contact an experienced real estate attorney in your area for help drafting an effective contract contingency.
Buying land without knowing what environmental problems you might inherit as an owner is risky. It’s worth the upfront expense of obtaining an environmental assessment, to help avoid owning land that you can’t use and might need to spend a mint to decontaminate later.