Phase I Environmental Audits are increasingly being done in a foreclosure environment. While the Phase I Environmental Audits is still done to the ASTM Standard E1527-2005, the practice of Phase I ESA during a foreclosure environment has a few nuances.
For starters, most clients want the Phase I Environmental Audit to be 100% compliant with the EPA’s All Appropriate Inquiry (AAI) rule. Often when doing a Phase I Environmental Audit in support of a new loan, my company, Partner Engineering and Science, will often rely on a preliminary title report or cut the environmental lien search from the scope of the Phase I Environmental Audit. This saves the client $250 and cuts a piece of the scope that very rarely uncovers something significant. Nevertheless, when a lender is taking title to property they usually want the Phase I ESA with no limitations.
Setting up the site visits can be a real challenge during a foreclosure. I highly recommend using a firm with a local environmental site inspector, as the site contact may shine the inspector. If the inspector had to fly to the site, then the consulting firm may try to pass extra costs on to their clients. For example, if you need to hire a Phase I Environmetnal Site Assessment in Texas, clearly you are wise to hire a firm with a significant presence in Texas. My firm, Partner published the locations of our offices and inspectors on our coverage map.
Lenders often want to know the physical condition of the asset before for closing and order a Property Condition Assessment Report. The Property Condition Assessment Report is also a valuable tool to the lender when selling the property.