January 20, 2014 Article

Phase I Standard Gets a Facelift

The update aims to return reliability and continuity to real estate transactions

by Samantha Corson and Kyle Johnson

Parties on both sides of a real estate transaction depend on the Standards and Practices for All Appropriate Inquiries in conducting Phase I Environmental Site Assessments for preacquisition due diligence that allow a party to assert the innocent purchaser, bona fide prospective purchaser, and contiguous property owner defenses to CERCLA liability.  However, the underlying standard, ASTM International’s E1527-05 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process,” has been applied differently in practice, leading to wide dissimilarities in the manner in which environmental consultants conducting Phase I assessments identified certain conditions, such as vapor intrusion and historical contamination. As a result, the intended standardization and reliability of the Phase I inquiry and the protections that flow from it have become less dependable, undermining the standard’s purpose. For these reasons, real estate practitioners familiar with these pitfalls are optimistic and changes to ASTM’s E1527-05 standard will return that reliability and continuity that parties to real estate transactions seek.

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