What Is a Phase 2 ESA?

We are often asked the question what is a Phase 1 ESA and what is a Phase 2 ESA?
To begin with ESA means Environmental Site Assessment.
Today we will be touching on what a Phase 2 ESA is but you will only require a Phase 2 ESA if you have undertaken a Phase 1 ESA and it is likely the property is contaminated or could be impacted from contamination from neighbouring properties.

If you have not had a Phase 1 ESA completed yet and do not know what this is we advise that you start off by reading the article What is a Phase 1 ESA? and also check out When do you need a Phase 1 ESA?

So you have read the articles above or already know that a Phase 1 ESA is due diligence taken before the purchase or lease of a property to ensure that the said property is unlikely to have contamination that protects you from liability down the road.   So what happens if contamination is suspected? This is where a Phase 2 ESA would come into play.   A Phase 2 ESA  report is a much more thorough and detailed study and will include sampling and laboratory analysis.  What is analyzed will depend greatly on the type of contamination that is suspected but can include sampling of soil and groundwater, mould, air, asbestos and lead.

Phase 2 ESA report is a more in depth and thorough examination of the property so this process is longer then a Phase 1 ESA and does cost more but when there is a strong likelihood that the property is contaminated that extra time for sampling and analyses is essential to ensure the property is safe and if you are borrowing money to buy your property the bank will insist this is completed if the Phase 1 ESA comes  back with a negative outcome.

When Do You need an Phase 1 ESA?

Having provided Environmental due diligence Phase 1 reports all over the world including Australia, Canada and the USA we often get asked the question when do I need a Phase 1 ESA?

This is a very good question.  Part of your due diligence when purchasing a commercial property should always be to obtain a Phase 1 ESA.  Nearly all bank lenders will insist on this being completed as they do not want to take the risk of a mortgaged property being situated on a contaminated site. They are not insisting you have this report completed to incur extra costs for you but simply because they want to protect their investment.
If you were buying the land outright would you want to take that gamble? Hopefully you are reading this and said a resounding NO!

So it is not always a requirement that you have an ESA Phase 1 completed but you would be taking a huge gamble that could prove very costly in the long run if you didn’t.

The Phase 1 ESA report is very important as it can protect you from liability and let you know before purchase of any risk that might be associated with purchasing said property.
This contamination could be environmental contamination such as groundwater and soil contamination or contamination resulting from the use of unsafe building materials such as asbestos.
If there is contamination then you can renegotiate the price to incorporate the cost of cleanup or you can simply walk away from the deal.  Whatever you decide it means you go into the purchase with your eyes wide open to any issues that you face or may not face down the road