Environmental Due Diligence in Commercial Real Estate Closings

Conducting environmental due diligence in commercial real estate sales in Connecticut involves several key steps. Here’s a structured approach:

1. Phase I Environmental Site Assessment (ESA):

   • Hire a Qualified Environmental Consultant: Engage a licensed environmental professional to perform the Phase I ESA, which assesses potential contamination from previous property uses.

   • Review Historical Uses: Investigate the history of the property and surrounding areas to identify past uses that could have caused environmental issues (i.e., industrial operations, waste disposal).

   • Site Inspection: Conduct a physical inspection of the property to identify any visible signs of contamination, such as stains, odors, or improper storage of hazardous materials.  Sometimes it is coming from an adjacent property.

   • Interviews: Interview current and former property owners, neighbors, tenants, and local officials to gather information on past activities and potential environmental concerns.

2. Phase II Environmental Site Assessment (if necessary):

   • If the Phase I ESA indicates potential contamination, a Phase II ESA may be required. This involves:

   • Sampling and Testing: Collect soil, groundwater, and air samples for laboratory analysis to determine the presence and levels of contaminants.

   • Risk Assessment: Evaluate the risk posed by any identified contaminants to human health and the environment.

3. Review of Regulatory Compliance:

   • Check for compliance with federal, state, and local environmental regulations. This may involve reviewing permits, environmental reports, and any past enforcement actions.

4. Consult Local and State Resources:

   • Utilize resources such as the Connecticut Department of Energy and Environmental Protection (DEEP) for information on known contaminated sites, environmental regulations, and state-specific guidelines.

5. Consider Environmental Insurance:

   • Depending on the findings, consider obtaining environmental insurance to protect against potential liabilities associated with contamination discovered after the sale.

6. Document Findings:

   • Keep thorough documentation of all assessments, communications, and findings to ensure compliance and to inform future owners or stakeholders about potential environmental issues.

7. Engage Legal Counsel:

   • Consult with an attorney experienced in environmental law to navigate any legal implications, negotiate liability issues, or address concerns raised during the due diligence process.

By following these steps, you can effectively conduct environmental due diligence and mitigate risks associated with environmental issues in commercial real estate transactions in Connecticut.