Monday, December 30, 2013 12:00 AM

Trigger events for environmental due diligence

By: Joseph Berlin, PE, EP, CP
Tags: None

The following is an article that ran in today's Grand Rapids Business Journal.  The key points to appreciate are that environmental issues can affect current or future value, price, terms and financing.  The scope of the environmental work should match the needs and goals of the transaction parties not necessarily a default scope of work that may or may not match the situation.

The following is an excerpt from the article from today's Grand Rapids Business Journal (12/30/13)(full article link)

December 27, 2013
| By Joe Berlin |

The concept of reviewing the “environmental” prior to the purchase of a parcel of commercial real estate is widely understood. What is less widely known is there are many events or transactions, other than a purchase, that should trigger some level of environmental assessment or environmental due diligence.

Buyers, banks and attorneys are accustomed to ordering a Phase I prior to closing to evaluate the environmental condition of property and to enable the purchaser to demonstrate that “all appropriate inquiry” has taken place.

This demonstration is necessary for a purchaser to later establish the Landowner Liability Protections available under the federal Superfund law (CERCLA) and Michigan’s Part 201 of NREPA.

Other events that should trigger environmental due diligence include:

  • Financing or refinancing
  • Foreclosure
  • Governmental actions
  • Estate/valuation
  • Leasing

These events can (and should) trigger an assessment of environmental status. Unfortunately, due to the well-recognized acceptance of the Phase I process in purchases of commercial real estate, the knee-jerk response is often “Get someone out here to do a Phase I now.” While sometimes this is the right response, at other times it can be counterproductive. This is due, in large part, to the standards under which Phase I’s are conducted.

To view the complete article please use the following link (Trigger Events). 

Joseph Berlin is a professional engineer in multiple states and testifies throughout the country on various environmental issues. He also is the owner of BLDI, a full-service environmental engineering firm headquartered in Grand Rapids. Judd Olson, EP and Jeff Kenneweg, EP of BLDI assisted in the development of this article. 


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