CURRENT USE IS ONLY ONE CHAPTER
A clean, operating self-storage facility may sit on land once used for automotive, industrial, agricultural or other commercial activity. Environmental diligence looks backward, outward and below the surface.
Environmental risk is easy to underestimate at a self-storage property. The current operation may use few chemicals and produce little industrial waste. The buildings may be newer than the activity that created the concern.
The relevant history can involve a former gas station, repair shop, dry cleaner, farm operation, factory, rail use, dumping area or heating-oil system. A release from a neighboring property can also move through soil, groundwater or vapor.
The goal is to understand the property’s environmental condition, potential liability, development constraints and remaining uncertainty before the buyer acquires the real estate.
A Phase I Environmental Site Assessment is generally the starting point for environmental diligence on commercial real estate. It is a structured inquiry into the property’s history and current environmental conditions. It ordinarily does not include drilling, soil sampling or groundwater testing.
EPA recognizes ASTM E1527-21 as a standard that can be used to satisfy federal All Appropriate Inquiries requirements. EPA describes All Appropriate Inquiries as the process of evaluating a property’s environmental conditions and assessing potential liability for contamination.
Source: U.S. Environmental Protection Agency, Brownfields All Appropriate Inquiries
A seller’s earlier Phase I can provide useful background. It should not automatically be treated as the buyer’s final report.
A report prepared for another party may have reliance limitations. It may also predate later operations, spills, nearby releases or changes in the standards. Environmental counsel and the environmental professional can help determine whether a new report, reliance letter or update is appropriate.
Timing is part of the diligence. EPA states that the inquiry must generally be conducted or updated within one year before acquisition. Certain components must be conducted or updated within 180 days before acquisition, including interviews, government-record review, the on-site visual inspection and searches for environmental cleanup liens.
Source: U.S. Environmental Protection Agency, All Appropriate Inquiries Final Rule fact sheet
A delayed closing can require updates. Track the completion dates for each time-sensitive component and compare them with the expected acquisition date. Ask the environmental professional and counsel what must be refreshed and what continuing obligations may apply after closing.
THE DATE ON THE COVER IS NOT THE WHOLE TIMING ANALYSIS
A report may look current while one or more required components are outside the applicable period. Track the work performed, not only the report-delivery date.
The Phase I is intended to identify environmental conditions through inquiry, records and observation. It does not guarantee that contamination is absent. It also has a defined scope and may not address every health, building-material, ecological or regulatory issue that matters to the transaction.
The executive summary is useful for orientation. The body and appendices show how the conclusion was reached and where uncertainty remains.
ASTM terminology helps the environmental professional communicate the significance and status of conditions. Ask for a plain-English explanation of each classification and its practical consequence for the transaction.
A condition indicating the presence or likely presence of hazardous substances or petroleum products under circumstances that warrant attention under the standard.
A condition addressed through controls or restrictions that remains subject to continuing obligations, such as maintaining a cap or limiting groundwater use.
A past release that has been addressed to the satisfaction of the applicable authority or under criteria that allow unrestricted use, as evaluated under the standard.
The exact conclusion belongs to the environmental professional. The buyer should understand what was released, where it was located, what cleanup occurred, which agency acted, whether closure was issued and whether any obligations survive.
A data gap is missing information that affects the inquiry. It is not automatically a reason to reject the property. The environmental professional should explain whether the gap is significant and whether it limits the ability to form an opinion.
Ask what additional source, inspection or testing could reduce the uncertainty and whether the work can be completed before the diligence deadline.
The current storage operation may have been built after the use that created the environmental concern. Study the property far enough back to understand meaningful prior activities.
Look for changes in addresses and parcel configuration. A facility may occupy several lots that had different histories, or a former operation may have sat on only one part of the current property.
Underground tanks may have held gasoline, diesel, heating oil or other liquids. Aboveground tanks, piping and dispensers can also create release concerns.
A statement that a tank was removed is incomplete without understanding when, how and under what regulatory process. If closure sampling was limited or contamination was reported, the environmental professional should explain the remaining concern and recommended follow-up.
Environmental conditions do not stop at the property line. Groundwater and soil vapor can migrate from a nearby source.
A database listing alone does not establish that the site is affected. The report should explain why the neighboring release is or is not a concern for this property.
EPA explains that vapor intrusion can occur when volatile or semivolatile chemicals in soil or groundwater migrate toward buildings and enter through cracks and openings. Petroleum vapor intrusion is one form of this pathway.
Vapor concerns can arise from the subject property or a nearby release. The evaluation may consider the contaminant, distance, geology, groundwater, building slab, utility pathways and intended occupancy. Soil-gas, sub-slab or indoor-air testing may be recommended when the Phase I cannot resolve the question.
Source: U.S. Environmental Protection Agency, Vapor Intrusion Resources
A Phase II investigation uses sampling or testing to evaluate a defined concern. The scope should be designed around the question identified during the Phase I.
Before testing, align the environmental professional, counsel, lender and contract requirements. Clarify access, restoration, reporting, agency-notification concerns, ownership of results and what happens if contamination is discovered.
TESTING SHOULD ANSWER A DECISION QUESTION
A broad sampling package can spend money without resolving the issue. The work plan should state what is being tested, why those locations and methods are appropriate, and how the results will affect the acquisition decision.
Asbestos-containing materials and lead-based paint may fall outside the standard Phase I scope. They can still affect renovation, demolition, maintenance, worker protection, disposal cost and schedules.
A visual statement that a material appears intact does not identify its composition. Sampling, laboratory analysis and an operations or abatement plan may be appropriate when the material will be disturbed or its condition creates concern.
Mold and moisture issues may also fall outside the standard Phase I. Review odor, staining, condensation, active leaks, flood history, HVAC performance and customer complaints.
Surface treatment without correcting the water or humidity source can allow the condition to return.
Wetlands review is different from a Phase I contamination inquiry. It can affect development, expansion, drainage work and the usable area of the property.
A dry-day site visit or ordinary survey may not resolve wetlands jurisdiction. The needed work depends on location and the planned project.
Soil and groundwater impacts can affect cleanup cost, excavation, utility work, vapor risk, disposal and future development.
A “closed” regulatory case may still include use restrictions, caps, monitoring or soil-handling requirements. Obtain the closure documents and have the environmental professional and counsel explain what survives the transaction.
Environmental risk is tied to what the buyer intends to do. A condition manageable under the current pavement and buildings may become more important when the plan involves excavation, new foundations, utilities, stormwater work or residential occupancy.
The conclusion should address the real plan rather than a generic acquisition of the parcel in its current condition.
Some liability protections and regulatory closures depend on actions after acquisition. These may include complying with land-use restrictions, cooperating with response actions, maintaining engineering controls, providing notices or taking reasonable steps regarding releases.
Environmental counsel should evaluate the requirements that apply to the transaction and owner. A favorable Phase I conclusion does not replace post-closing compliance when controls already exist.
The purchase agreement should provide enough time and access for the Phase I, agency-file review and reasonable follow-up. Counsel can tailor the provisions to the property and transaction.
Clarify the process before sampling begins. The buyer should know what happens if a concern is found and whether the schedule allows the result to inform the decision before the deposit becomes nonrefundable.
Date the reports and track reliance rights. Keep the record with the property so future owners and operators can understand the basis for decisions and ongoing duties.
AN ENVIRONMENTAL FINDING NEEDS A PATH TO RESOLUTION
Some conditions can be investigated, managed, remediated or addressed through the transaction. The buyer needs to understand the remaining uncertainty, cost, schedule, legal consequence and continuing obligations before acquiring the land.
A thorough environmental process does not promise that every subsurface condition has been found. It gives the buyer a disciplined basis for understanding history, recognizing warning signs, completing focused follow-up and deciding which uncertainty can be accepted.
Ask one final question: If the known conditions, controls and recommended investigation become your responsibility at closing, do you understand the path forward and still want to own the real estate?
No. A Phase I evaluates environmental risk through records, interviews and visual observations. It generally does not include soil, groundwater or vapor testing. A report with no recognized environmental conditions means the assessment did not identify a condition meeting that classification based on its scope and available information.
A seller’s report can provide useful background, but it may not give the buyer reliance rights or satisfy the buyer’s lender and liability-protection needs. Confirm who commissioned it, which parcels it covers, when its components were completed and whether it addresses the planned transaction. A new assessment, update or reliance letter may be required.
The assessment may need to be updated. Federal All Appropriate Inquiries requirements generally impose a one-year window before acquisition, with certain components required within 180 days. Buyers should track the dates of interviews, government-record reviews, site inspection and environmental-lien searches against the revised closing date.
A Phase II may be recommended when the Phase I identifies a specific concern that sampling could clarify. Examples include a former fuel tank, repair shop, dry cleaner, stained area, undocumented fill or nearby release. The testing scope should target the identified issue rather than apply a generic sampling plan.
Yes. Contaminated groundwater, soil vapor or surface drainage can cross property boundaries. The evaluation should consider the neighboring use, contaminant, distance, groundwater direction, topography, cleanup status and possible migration pathways. A database listing alone does not prove that the self-storage property is affected.
Construction can disturb conditions that are manageable beneath existing pavement or buildings. Excavation, foundations, utility trenches and stormwater work may encounter contaminated soil, groundwater, buried tanks or regulated building materials. The environmental professional should evaluate the property in light of the buyer’s actual construction and operating plan.
Yes. Regulatory closure may include groundwater restrictions, soil-management rules, recorded covenants, monitoring, vapor systems or requirements to maintain pavement or another protective cap. Buyers should review the closure documents and identify the cost, reporting duties and land-use restrictions that continue after closing.
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