Understanding Phase 2 Environmental Site Assessment

When is Phase 2 Environmental Site Assessment needed?

When a Recognized Environmental Condition is discovered during the Phase 1 Environmental Assessment, additional testing can be recommended in cases where it seems likely that there is an environmental liability that will substantially reduce the value of the property in question. This is typical in cases where it is deemed likely that the property has been impacted by hazardous materials or petroleum products. The impact may include contamination of structures, ground water, or surface water.

Certain previous uses of the property make it very likely that this type of investigation will be necessary. This includes gas stations, machine shops, dry cleaners, manufacturing facilities and hazardous waste storage sites. Such uses will typically require expert analysis of soil and groundwater to determine if excess contamination exists.

It is not uncommon for a lender to automatically require a Phase 2 Environmental Site Assessment in order to qualify for a loan on real estate that has been previously used in any of the above listed types or uses or similar uses. When a lender stipulates that such a study must be done in order to qualify for financing, the property will need to be properly inspected for the purpose of getting the loan. It is rare that this stipulation can be gotten around by paying cash for the property. Lender requirements are one of the more common reasons these investigations happen.

What does Phase 2 Environmental Site Assessment cost?

Because each such investigation must be custom designed for the specific site in question, he cost of the assessment varies substantially. The extremes run from a low of $2,500 to a high of $250,000, with average costs running more in the range of $6,000 to $25,000. Each site requires a custom price quote. Some of the details that vary from site to site include: type of analyses needed, drilling method needed, groundwater testing required, and soil testing required.

When does it go on to Phase 3 Environmental Site Assessment?

If soil or water samples indicate a serious problem, if further information is needed, or if remediation is required, the next step is Phase 3 Environmental Site Assessment. The amount of cleanup needed will depend upon the severity of contamination. The level of acceptable cleanliness is dictated by various federal, state and local laws or standards. Personal preference can exceed these standards. Some owners want all contaminants completely removed or reduced to undetectable levels, thus going beyond what is required by law.

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