Encyclopedia
Environmental Site Assessment (Phase I)
A desk and site review of a property's past uses to find possible contamination. It usually doesn't involve sampling.
For example: A buyer of an older industrial lot makes the offer subject to a satisfactory Phase I. (Illustration only, not a real deal.)
Official source: Site remediation (Government of BC)
Example only, not a real client. Say you are buying a small industrial lot in Burnaby. The Phase I assessment finds that a dry cleaner and a fuel tank were on neighbouring sites decades ago. Instead of guessing, you extend your subject date and order a Phase II with soil testing. The results come back clean, your lender is satisfied, and you buy knowing what is under the ground.
What I’d tell a friend
On industrial or older commercial property, get a Phase I environmental assessment before you remove subjects, and build enough time into your offer to follow up if it raises questions.
Why it matters to you
It flags the risk of contamination before you buy or lend. If it finds concerns, a Phase II can add time and cost.
How to use it in your deal
Hire a qualified environmental consultant early in the subject period. They review historical records, aerial photos, government records and neighbouring uses, and visit the site. If they find possible concerns, they'll recommend a Phase II with testing. Make the deal subject to a satisfactory report, and build in time for a Phase II if needed.
A Phase I is a review of records, site history, a walk-through and interviews; it doesn't usually include sampling. Ask the consultant to look at neighbouring properties too, since contamination moves. Lenders often require a recent report addressed to them, so check reliance before you order. If the report flags concerns, budget time for a Phase II before subjects come off. Older reports should be updated, because a site's use and neighbours change.
Mistakes I see
Skipping it on sites with past industrial, auto or dry-cleaning uses, or relying on an old report written for someone else. Ignoring neighbouring properties, because contamination can migrate. Removing subjects before reading the recommendations.
In BC and Vancouver
Contaminated sites are governed by the Environmental Management Act and the Contaminated Sites Regulation. The Province has a site registry and guidance on site information and disclosure.
Official sources: Contaminated Sites Regulation (BC Laws) · Site information and the Site Registry (Government of BC) · Environmental Management Act (BC Laws)
What a Phase I looks at
A Phase I environmental site assessment is a review by a qualified consultant of a property’s past uses, government records, aerial photos and a site visit. The goal is to spot signs that contamination might be present on the property or nearby.
It usually does not include taking soil or water samples. If the consultant finds concerns, the next step is often a Phase II, which involves testing.
Why it matters to your deal
Cleaning up contamination can be expensive and slow, and it can make a property hard to finance or sell later. Many lenders ask for a Phase I before lending on industrial and some commercial property.
Responsibility for contamination can reach past owners and current owners in some situations. Talk with a BC lawyer about what that means for your purchase, and use what the report finds to set price, subjects or protections in the contract.
Questions to ask before you sign
- What were the site and its neighbours used for?
- Is there a site registry record?
- What does the consultant recommend?
- Can I rely on the report, and so can my lender?
Who orders the report—and who can rely on it
A Phase I environmental site assessment looks for contamination risk through history and inspection. If something shows up, a Phase II with samples may follow. Lenders often will not rely on a report you ordered for yourself—so if you are financing, ask whether the lender should commission it.
Ask the seller for old reports and any regulator closure letter early. Contamination can stop a loan cold.
Your environmental consultant and lawyer own scope and reliance language.
Keep reading
Related terms: Phase II ESA, Contaminated site, Site disclosure statement
- Commercial due diligence checklist for BC buyers
- Environmental due diligence for commercial property in BC
- Sale-leaseback for BC business owners
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General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.