We're buying a new commercial/industrial property or business. Do we need to spend the money on an environmental assessment?

Generally speaking, environmental due diligence satisfies three main objectives. First, it lets a prospective purchaser determine whether a property has a serious environmental impairment prior to purchase of the property. Second, it satisfies lender requirements to ensure that the lender will not be stuck with an environmentally impaired property as collateral in the event of a default. (Thus, the decision whether to conduct a Phase I and/or Phase II environmental site assessment is often out of the purchaser's hands.) Third, it allows the purchaser to demonstrate that they made "all appropriate inquiries" to check for environmental problems prior to purchasing the property, thereby qualifying for some liability protections as an innocent purchaser in the event historic environmental contamination is identified on or emanating from the property.

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