1. Introduction. As with any due diligence investigation, the type of assessment and level of effort to be extended depend on the relative facts of each transaction. The assessors usually try to identify any potential risks, quantify the extent of liability, and formulate a strategy for shifting the potential liability through another party.
2. Assessing Real Estate for Contamination and Other Environmental Contingencies. In real estate deals, environment due diligence focuses on any existing and potential environmental liabilities that may arise from ownership or use of real property. The cornerstone of this effort usually is an environmental audit. Real estate audits are typically divided into three phases: Phase I includes qualitatively identifying past and present sources of environmental contamination; Phase II includes developing a scope of work for, and implementing, sampling if required; and Phase III includes removing contamination.
3. Assessing Other Aspects of the Business For Environmental Contingencies. When the transaction involves the transfer of the ongoing business, the environmental audit should devote more attention to issues such as compliance with applicable regulations and permits, liability arising from the off-site disposal of hazardous waste, corporate histories, and potential toxic tort claims.
4.
The Most Significant Misconceptions About Due Diligence For
Environmental
Issues:
a.
If one did not create hazardous waste, one is not liable for clean-up.
b.
Lenders do not have to worry about environmental conditions.
c.
A person who buys land without knowledge of environmental problems is
not
liable for clean-up later.