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You are here: Home » Resources » Articles » Environmental Insurance for CMBS Deals – What You Need to Know

October 23, 2018

Environmental Insurance for CMBS Deals – What You Need to Know

By Charles Tallinger, LEED AP


The environmental due diligence required for loans that will be securitized into commercial mortgage backed securities (CMBS) does not differ much from that required by most other types of lenders. This consists of a Phase I Environmental Site Assessment (ESA) that meets the requirements of the American Society for Testing and Materials (“ASTM”) and is conducted by a reputable environmental consultant. In most cases the report must have been conducted within 12 months of loan origination.

In the last two years we have seen a significant increase in the number of deals where lenders and borrowers are forgoing a Phase II and going right to either the first bullet point (a 125% – 150% hold back of the cost to cure) or to the third bullet point (environmental insurance).

To read the rest of this blog on GlobeSt, click here.

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