30 Sep 2019
Anyone involved with the acquisition of an existing self storage facility and especially anyone involved with the purchase of property to be converted to a self storage facility is aware of the due diligence requirements that are part of the deal. With strict liability against property owners being imposed by state and federal authorities for the cost of cleanup, a potential purchaser must perform an adequate investigation of the property to discover and evaluate any possible contamination of the desired site before spending its money. Once that investigation is done, the purchaser can then consider any risks in purchasing the property and handle its negotiations for the purchase of the property in light of the information obtained. The following is a summary of the three phases of property site assessments:
The scope of a site assessment can be as broad or narrow as the purchaser chooses, depending upon that purchaser's goals and willingness to accept risks as it relates to potential environmental hazards on the property and the requirements of the potential lender. A Phase I site assessment includes both a document inquiry as well as a physical walk through of the property. ...
Based upon the information gathered from the Phase I assessment, a determination will be made whether to proceed to a Phase II assessment. ...
The final phase of the process, depending on the results of the Phase I and Phase II assessments, is the remedial work performed to remove the contaminants from the site. If remedial work is to be done, it is likely the cleanup will occur prior to closing and will be paid for by the seller...
This article was originally published in Scott’s “Legal Monthly Minute” Newsletter in June 2019
