Real estate professionals often must evaluate environmental risks associated with property deals. Identifying, assessing, and minimizing such risks has become more complicated in light of several recent developments: most notably, changes to risk evaluation standards; a renewed regulatory emphasis on environmental compliance and enforcement; and a spate of transactions stemming from the recession.
In real estate terms, "environmental risks" refers most often to risks stemming from environmental conditions of a property. However, the definition also may refer to risks based on regulatory programs concerning a property or resource limitations.
In general, every property should be evaluated for potential soil, groundwater, and vapor contamination. Usually, a Phase I Environmental Site Assessment or Transaction Screen will suffice for this purpose.
Depending on the property, however, a more comprehensive evaluation may be needed to assess other potential risks — including asbestos contamination, mold, wetlands, water resources, endangered species, and more — that can trigger liabilities.
Source: National Law Review