Phase I & Phase II Environmental Site Assessment


Phase I Environmental Site Assessment investigates a property’s past and present environmental conditions. It is generally considered the first step in environmental due diligence in a commercial real estate transaction.

The Phase I ESA involves a search of available governmental, real estate, and commercial use records, which will help identify potential or existing environmental contamination liabilities associated with a property. The Phase I ESA also requires a walk-through of the property to visually observe and record (pictures and notes) any obvious environmental conditions that may exist; the records search does not reveal that.

The Phase I ESA is conducted under the guidelines and provisions of the ASTM Designation: E1527-21 Standard Practice for Environmental Site Assessment: Phase I Environmental Site Assessment Process (November 2021).

A Phase I ESA Report lists any potential environmental risks associated with the property. Phase I’s can be used for real estate transactions, property development, bank financing, refinancing and foreclosures, and other in-house proactive audit programs to protect the potential purchaser of a property from liability associated with environmental contamination, which may require remediation.


Phase II Environmental Site Assessments are a continued part of the environmental due diligence for commercial real estate transactions. A Phase II ESA aims to evaluate the presence or absence of petroleum products or hazardous substances associated with a piece of property. In addition, a Phase II ESA can often be used to determine the nature of any potential environmental contaminants found on a property.

If the Phase I ESA determines the possibility of environmental contamination, then the potential purchaser of the property may request further investigation. The Phase II ESA is a process where air, groundwater, and soil samples are collected and analyzed for potential contamination. Sometimes building materials are tested for the presence of lead-based paint or asbestos, which are hazardous to human health, as part of a Phase II ESA.

A Phase II ESA is used to report the findings of the sampling investigation so that the potential buyer may make an informative decision on whether to purchase the property or not.