Encyclopedia
Phase II environmental site assessment (ESA)
An environmental assessment with sampling to confirm or rule out contamination.
For example: A Phase I flags risk, so the buyer orders a Phase II. (Illustration only, not a real deal.)
Official source: Site remediation (Government of BC)
Example only, not a real client. Say a Phase I report flags a former dry cleaner next door. A Phase II assessment takes soil and groundwater samples to see whether contamination has spread to your site. The results guide your decision to proceed, renegotiate or walk away.
What I’d tell a friend
If a Phase I flags risks, get a Phase II before you remove subjects. Testing is cheaper than cleanup.
Why it matters to you
Results can change the price, the timeline or whether the deal goes ahead. If contamination is found, cleanup can be costly and lenders may hold back, so build time for it into your subjects.
How to use it in your deal
Buyers should build time for a Phase II into the subject period, because drilling, lab results and the report can take several weeks. Agree with the seller on access and restoration of the site. Ask the consultant to explain what was tested and what wasn't. If contamination turns up, get legal and environmental advice on cleanup costs, liability and whether to renegotiate or walk away.
Sellers who know the site's history can order their own Phase II before listing to avoid surprises. Lenders often require one when the Phase I flags a risk. Tenants with uses that could contaminate may be asked for testing at the start and end of a lease.
Mistakes I see
Skipping a Phase II when the Phase I flagged a real concern. Limiting the scope so much the results don't answer the question. Removing subjects before the report arrives. Assuming a clean result on one spot means the whole site is clean.
In BC and Vancouver
BC's Environmental Management Act and Contaminated Sites Regulation set who can be liable for contamination and the standards that apply. The province's site remediation pages explain the process.
Official sources: Environmental Management Act (BC Laws) · Contaminated Sites Regulation (BC Laws) · Site remediation (Government of BC)
What it is
A Phase II environmental site assessment involves sampling soil, groundwater or building materials to test for contamination.
It follows a Phase I, which reviews records and site history.
Planning
Allow time in your subject period for testing and lab results.
Ask the consultant what the results mean for cost and risk, and get cleanup estimates before you renegotiate.
Get advice from a BC lawyer on who is responsible if contamination is found.
Questions to ask before you sign
- What did the Phase I flag?
- What will the Phase II test, and where?
- How long will results take?
- What happens if contamination is found?
- Will my lender accept the report?
Keep reading
Related terms: Environmental Site Assessment (Phase I), Contaminated site
- Commercial due diligence checklist for BC buyers
- Environmental due diligence for commercial property in BC
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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.