Understand the Limitations of a Phase I Environmental Site Assessment

Understand the Limitations of a Phase I Environmental Site Assessment

The need for Phase I Environmental Site Assessment is the most raised question, as it comes with some limitations! – Let us have a detailed view of it-

“What is a Phase I Environmental Site Assessment and for what reason do I need one?” It is generally presented by a prospective buyer of a business property who is trying to secure a loan —and the investor has made getting a Phase 1 Environmental Site Assessment as a state of the loan.

In this blog, we will talk about why your financier requires a Phase I ESA, and the limitations of phase 1 environmental site assessment.

Each Phase I Environmental Site Assessment follows the four-stage process:

  • Records Evaluation
  • Site Investigation
  • Interviews
  • Report Preparation

Here are some of the limitations of Phase I ESA:

    1. Checking the Interiors – Many times, entering a building just can’t happen. Maybe it is locked, barred, or the seller just won’t let anyone in, which is a significant limiting factor in a Phase I Environmental Site Assessment. Therefore, the environmental professionals cannot inspect and record what they observed (say in basements) or might not felt ok with.


    1. Time-consuming – Though a good Phase I ESA needs weeks to conduct and write up. It can be done quicker, but that’s not recommended. Phase I, if not done in detail, may overlook vital information that could influence the client’s decision to purchase the property or its calculation of an appropriate purchase price. The entire process is a bit time-consuming, due to negotiations, closing date, or the pre-closing matters.


    1. Consultant Liability: In-case the Phase I doesn’t correctly assess the environmental condition of the property; the acquirer may check the consultant for compensation. The claimed compensation can include not only the reduction in value caused by the environmental condition but also certain other costs.


    1. Gaps- Interviews: In The Phase- I interviews are conducted, but at times, there is no one at the property to talk? Or the employees aren’t aware or even if one can’t speak to site representatives? So, even though one is getting the information, we aren’t sure what we’re missing out on, and waiting could lead to more wasting of time.


    1. Questionnaire Issues: Many clients receive a questionnaire to complete. The issue comes as it can result in the inclusion of some irrelevant written pattern in the final report that may sound if the user ever made the appropriate internal inquiry. Ideally, the questionnaire must be given to the consultant so that it can be incorporated into the final version of Phase I.


  1. The Final Draft Phase I’s: Results in Phase I can either root problems or simplify things in the future. Clients don’t even get a draft of Phase I from the consultant before it is finalized. Reviewing Phase I and negotiating with the consultant for any modification is restricted.

While we have discussed limitations, let us know still Why to get a Phase I Environmental Site Assessment Report!

The answer is:

  • To Identify Recognized Environmental Conditions (RECs).
  • Requiring CERCLA liability protection.


To sum up- the Phase-I is most likely going to prevent you from having to pay for expensive contagion clean-up costs. In most cases, you really ought to get a Phase I ESA done. Maybe you want a quick screening to determine if a Transaction Screen Assessment that identifies Potential Environmental Concerns (PECs) associated with properties will be the best fit for a particular property type or in case you want to acquire a property then going straight to a Phase I Environmental Site Assessment Report might be a better option for a particular deal.

Please don’t risk it. Consult Fulcrum Resources that can be your trusted partner to perform all Phase I Environmental Site Assessment with seasoned Environmental Professionals who meet the requirements of the EPA’s All Appropriate Inquiries (AAI) Rule. They perform Transaction Screen Assessments & Phase I ESA throughout the U.S.

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