Banks and Commercial Lending

Call the experts at Terra Environmental to help you manage the environmental risks of being a lender on commercial property.

The purpose of conducting a Phase I Environmental Site Assessment (ESA) prior to the purchase of a commercial property is to identify the presence of a Recognized Environmental Condition (REC). Terra Environmental helps you manage the risk and uncertainty of being a lender on a property, taking the burden off you and making sure your interests are protected. A responsible lender should not make a commercial loan without determining that there are no indications of a REC on the property.  A buyer who borrows money to purchase a property that turns out to be contaminated may not be able to repay their loan due to the costs incurred in fines or cleanup.

A Phase I ESA is the industry standard to evaluate whether a property is free of RECs. A lender needs to be sure that any business conducted on the property did not carry with it an environmental liability. If a lender has to take possession of a site with a REC due to foreclosure of a mortgage or for any other reason, they may find that the property is worth very little or that the cost of a cleanup exceeds the property’s value.   The US EPA requires a Phase I ESA be conducted as part of your due diligence in order to qualify for the innocent land owner defense.  Terra Environmental’s Phase I ESAs meet the requirements of ASTM E1527-13.