Before leasing commercial or industrial property for a new business operation, prospective lessees should consider environmental due diligence to be just as important as if they were buying the real estate concerned. One of the most prudent measures that a potential lessee can take is to have a Phase I Environmental Site Assessment (ESA)performed to identify any actual or potential environmental contamination.

Here are a couple reasons why business operators should engage an environmental consulting firm to conduct a Phase I ESA prior to signing any commercial property lease agreement:

Joint and Several Liability

Under the legal principle known as “joint and several liability,” costs for cleaning up contaminants on a commercial site can be imposed upon the site operator, in addition to the current owner and previous owners and operators.

The only potential defense for the current operator would rest on proof that all appropriate inquiries had been made prior to leasing the site, and that those inquiries showed no reason to believe an environmental threat existed. Completion of a Phase I ESA provides evidence that such inquiries had in fact been made.

Responsibility Under Lease Clauses

There is a clause included as standard in most commercial leases known as the “compliance with all laws”clause. Under this clause, a lessee can be held responsible for any contamination that comes to light during the lessee’s tenancy, regardless of when or by whom the contamination was actually caused.

A Phase I ESA should unearth any potential sources of contamination, enabling a prospective lessee to reconsider the choice of site or at least to insist upon remediation by the site owner before signing a lease containing a “compliance with all laws” clause.

Corporate Social Responsibility

In addition to safeguarding against liability, conducting a Phase I ESA prior to leasing a commercial site can protect business operators’ reputations and demonstrate corporate social responsibility. Apart from anything else, ensuring that operations commence only on an environmentally sound site can simply be seen as the right thing to do.

ATC understands the commercial real estate market requires the highest level of professionalism from an environmental compliance partner. We have had the extraordinary opportunity to partner with thousands of clients over the past 35 years, and we still perform environmental due diligence services as a core offering – not a sideline.

Contact us if we can be of assistance.