The commercial real estate world is a constant state of assessing risk, creating investment strategies, and avoiding liability—your first steps could determine how you move forward with your transaction. In any transaction, you should decide what your appetite for risk is—are you comfortable doing your basic due diligence or do you want to dig deeper and have a plan to resolve what could possibly be uncovered? What are the liabilities associated with not pushing further into the remedial process past the initial assessment process? Does conducting a Phase I satisfy the buyer’s requirement for a limitation of liability under that state’s environmental liability law?
What are they?
If you’ve ever done even a single commercial real estate deal, you are familiar with a Phase I Assessment (PI) and the importance of conducting it before buying or selling a property. In order to get a full picture of the property before you sign on the dotted line, a typical Phase I will include a site visit, research of historical records, maps, and directories, and review permitting and zoning for your property. In the State of New Jersey a Preliminary Assessment (PA) can, and should, be done in lieu of a Phase I.
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