Realtor Viewpoint

"Sellers Should Invest in Environmental Homework"

I am always amazed to find industrial and commercial sellers who want to put a property on the market, especially for sale, and have no idea of the environmental condition of their property. The standard line is, "we will get it tested when we have a buyer." As a commercial and industrial practitioner in this business for over 25 years, I always find that this attitude or strategy blows more deals than helps them. The legal and financing industry are very attuned to the environmental transfer laws, because of their treacherous experiences over the last 10 years. I always advise my customers and clients, that it is a wise choice to, at the very least, start out with a Phase I site audit, to determine past uses of the property, any outstanding violations, and obvious staining or incorrect chemical storage practices on the property presently. It almost goes with saying, that if the property has any past manufacturing, dry cleaning, photo finishing, or gasoline uses, a Phase II is absolutely necessary up front. That test includes drilling wells, and taking soil and water samples for further site analysis.

Getting back to the legal and financing institutions. First of all, there are no banks which I know of, who would lend money on assets without these tests being done by an "approved" environmental engineer/consulting firm. And secondly, you may get some sellers that might say that they would hold the mortgage, because they want to avoid the tests. Today’s professional real estate attorney is keenly aware of these situations, and representing buyers, they will want to know that their client is attempting to purchase a property that doesn’t have a tarnished "history." The very nature of Greater Waterbury’s industrial heritage, ensures the ongoing need for Phase I and II environmental audits, and then, where there are problems discovered or confirmed, that is where Phase III comes in, which is the environmental clean-up and sometimes, ongoing remediation. (i.e.: monitoring wells, etc.)

My recommendation to commercial and industrial property owners would be: wouldn’t you want to know what you have to sell and be able to make it right before getting into expensive and time consuming negotiations, with a buyer that probably won’t close, due to the complications that were unknown to him, prior to the property going to contract?