If a property has a Phase I report that shows contamination, does the Seller need to perform a Phase II?

My client is interested in purchasing a property that is located downhill from a gas station. The listing broker told me there is a Phase I report and it must show contamination because the Seller needed to provide a Phase II, which they would not do. If the Phase II shows contamination, who pays for the clean up?
In Buying Property - Asked by Hap A. - Sep 9, 2009
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Answer(s)

Jeffrey B.
Broker/Agent
Tampa, FL

It is a point of negotition in the contract process. Not knowing what the cost would be a seller is naturally reluctant to make any committment. By doing the Phase II the buyer can assess the risk then make the determination to go forward or not (that is why we have due diligence periods). Once the amount of contamination is established you can determine risk, value clean up if needed, or purchase insurance to cover buyers risk. Then you could come up with an adjusted rate sales price by asking seller contirbution. Problem with some contamination is the clean up could cost more than property is worth.

Sep 9, 2009
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David S.
Property/Asset Manager
Oklahoma City, OK

Encourage your client to view other properties. If the potential Seller will not fund a Phase II (poking holes in the ground), then they sure will not fund a cleanup. Move along...

Sep 9, 2009
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Albert Maxwell G.
Broker/Agent
Ventura, CA

TALK TO AN ENVIRONMENTAL ATTORNEY

Sep 21, 2009
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Gregory G.
Broker/Agent
San Francisco, CA

It is negotiable.
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Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531
(415)225-9894
gregory.garver@gmail.com

Oct 23, 2009
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