With commercial property in high demand, here are a few things to consider before purchasing:



1. Does it make financial sense?
2. Is the location right?
3. Does purchasing this property put me in a better position?

You need to consider the possible risk factors of the property you are planning to purchase.

For example, would you buy a home without a home inspection? Of course not! You would want to know the potential problems and the cost of repairs. Buying a Commercial property is no different.

In the case of a commercial property, however, you’ll want an environmental report. In today’s regulatory environment, you need not have caused an environmental mess to be responsible for its cleanup.

Environmental consultants are property detectives, gathering information, reviewing it and reporting the facts about the property. Buyers like them, as the Phase 1 report can protect them from possible third-party liability. Sellers like them, because they can find out about and take care of any recognized environmental conditions (RECs) prior to the sale.

Banks and lending institutions used to hire environmental companies to help them decide if an investment was sound. Lenders didn’t want to underwrite and approve financing for a property only to find out later that it would require thousands of dollars in cleanup costs.

Today most banks and lending intuitions require the buyer to order a Phase 1 Environmental Site Assessment to protect the bank’s position and the borrower’s investment. A Phase 1 report includes:

1. An onsite inspection of the inside and the outside of the subject property, along with adjacent properties
2. A review of records including maps
3. Aerial photos
4. The history of the property and its uses
5. Interviews with current and past tenants

The phase 1 report does not look for asbestos, lead paint, mold or gas levels – all of which could also lead to costly cleanups. A Phase 1 assessment is like cheap insurance that protects both buyers and lenders from huge cleanup costs in the future.

We are seeing more sellers doing Phase 1. When a property owner is proactive and forward-thinking on the sale of the property, it makes the sale much easier for all parties involved in a transaction.

The SBA has its own lending requirements for commercial real estate because business owners can often improve their position by purchasing a property. There are also CDC/504 loans to assist business owners with financing, which lowers the lender’s risk on SBA loans.

If you are going to get an Environmental Phase 1 report, ask for referrals. Make sure you get a few quotes that clearly state the scope of work, time to complete the report, and the price. Make sure you are working with licensed professionals who have been in business more than five years and know the laws in your state.

Then you can sign on the dotted line!

About Your Columnist

JC Keville is a featured columnist for Women Taking Charge, the official blog of Connected Women of Influence, where she covers the topic of environmental liability. A third-generation San Diegan, she has more than 19 years of business experience and a reputation for being honest, reliable, hardworking and dedicated to doing her best for clients.

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