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Using Phase IIs To Avoid A "Bottomless" Environmental Mess

Kristine MacWilliams, PE of Partner speaks to Geoffrey Metz of

Kristine MacWilliams

CHARLOTTE, N.C.—As the CRE market picks up steam, competitive pressures are creating a tendency to push deals through. With an eye on closing deals, many lenders don’t go beyond the basics of the due diligence process. That means Recognized Environmental Conditions (REC) can sometimes get filed away as “resolved” with little further investigation. There are several ways this happens: Certain institutions’ risk profiles make them comfortable with the risk of smaller RECs, and digging deeper to an identified REC by conducting a soil and groundwater investigation is an upfront cost that increases the deals expenses and may delay closing.

But, as Kristine MacWilliams, PE of Partner Engineering North Carolina, PLLC sees it, without a realistic picture of a seemingly limited REC, the buyer or lender could be leaving themselves exposed to hidden risk. And, in many cases, it can also protect against substantial long-term costs and complex environmental liabilities. spoke to the technical director or Partner's Subsurface Investigation Group to find out what levels of investigation are appropriate for a given situation, and how to best balance cost, risk, and competitive pressures.

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