How Delayed Phase I & Phase II Environmental Site Assessments Derail Commercial Real Estate Deals
In commercial real estate, deals rarely fall apart because of environmental contamination; They fall apart because of timing.
At Karl Environmental Group, we regularly see transactions delayed or disrupted not due to environmental risk itself, but because environmental due diligence starts too late. When Phase I or Phase II Environmental Site Assessments are delayed, even routine findings can become major obstacles.
THE MOST COMMON MISTAKE: WAITING TOO LONG
Many buyers wait until a lender formally requires a Phase I Environmental Site Assessment before starting the process. By that point, contracts are signed, deadlines are tight, and financing milestones are already in motion.
Late-start environmental reviews can result in:
- Delayed closings
- Financing holds or added lender conditions
- Expanded environmental scope
- Increased legal and financial exposure
WHY TIMING MATTERS IN PHASE I & PHASE II ASSESSMENTS
A Phase I ESA is the foundation of environmental risk management. When Recognized Environmental Conditions (RECs) are identified, a Phase II investigation may follow. This may include soil sampling, groundwater testing, or vapor intrusion evaluation.
When Phase II work begins late:
- Closings may be pushed back
- Financing may be paused or restructured
- Development schedules may be disrupted
- Buyers may be forced to proceed without full environmental clarity
ENVIRONMENTAL DUE DILIGENCE IS A RISK-MANAGEMENT TOOL
Starting early allows buyers to:
- Identify environmental liabilities before closing
- Negotiate pricing or terms with confidence
- Maintain control of project timelines
- Meet lender and regulatory requirements without pressure
WHY CLIENTS CHOOSE KARL ENVIRONMENTAL GROUP
With more than 35 years of experience, Karl Environmental Group provides:
- Phase I Environmental Site Assessments (AAI-compliant)
- Phase II Environmental Investigations
- Commercial real estate environmental due diligence
- Asbestos, lead, mold, and indoor air quality consulting
- Regulatory compliance support
We serve property owners, developers, lenders, and municipalities throughout Pennsylvania and New Jersey.
PLAN EARLY TO PROTECT YOUR INVESTMENT
Environmental issues don’t usually kill real estate deals, late environmental decisions do.
If you are purchasing, refinancing, or redeveloping a commercial or industrial property, contact Karl Environmental Group early to keep your project on schedule.
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