A Brief Overview of Environmental Due Diligence
If you’re looking to expand your business and build a storefront or industrial unit, it’s important to know what’s going on underneath the surface. Like checking under the hood of a car, checking the environment before buying a property is essential.
Read on for a brief overview of environmental due diligence to learn about one of the most important steps to acquiring property.
What Is Environmental Due Diligence?
Environmental due diligence is the process of evaluating the environmental conditions and risks associated with a property. Lenders, land developers, attorneys, and private owners may require this assessment to refinance, purchase, or build on the property.
In the review, you can find out if the property has historical materials or structures, contaminated soil or water, or if your property is near vulnerable habitats.
There are two types of environmental due diligence: Natural Resources Environmental Due Diligence and Traditional Environmental Due Diligence.
Why Is It Important?
Environmental due diligence is an essential form of proactive risk management before you begin a commercial project. It’s a liability protection measure to prevent and reduce risks by assessing potential environmental liabilities.
This will also prevent failed projects or delayed developments due to fines, lawsuits, and revoked permits. Without environmental due diligence, you don’t know what’s on the land you purchased or if it is safe to build on.
When Is Environmental Due Diligence Required?
Most lenders require environmental due diligence before they accept collateral or refinance or finance a real estate purchase for a construction loan. If your property is currently being held as collateral for an existing mortgage or loan, you must have environmental due diligence in case something compromises your property’s value.
Environmental due diligence is often required to grant funding for real estate development projects and those planning to open public businesses.
How Can We Help?
You’re probably wondering how we can help with environmental due diligence. A Phase 1 Environmental Site Assessment can cost you between $1,400 and $6,000 for commercial property. Of course, many factors can affect the cost, including the property’s location, the travel costs, and the number of properties you need to have assessed.
At Val Chris, we are trustworthy commercial hard money lenders who strive to accommodate our clients. We hope our brief overview of environmental due diligence cleared any questions or confusion you may have had. If you need financial assistance, don’t hesitate to contact us to set up a meeting or to ask additional questions.
