Contamination – Phase One’s; What does it all mean?

A Phase one is an environmental audit where they environmental company that is hired by the bank does a complete background check on your property as well as a physical check for any environmentally sensitive issues.

If a Properties history, and they go way back, shows that there were never any environmental uses that would have caused problems a clean phase one is issued and the lenders will proceed with their financing.  This is providing that the current use of the property is in conformity with past uses.

If on the other hand they find that there is some history of contamination they will immediately proceed to a phase two, and do a thorough property analysis both on paper and in the field.  As long as there is any hint of contamination and a request for remediation there will not be any lender that will fund a transaction.

For a lender to close on a loan, actually even to begin to underwrite the loan they will need a No Further Action Letter, and without this letter a lender will not take the time to even explore the underwriting of the loan.  A No Further Action letter can take as long as one year to get issued after all remediation is complete.

So as a final thought make sure all properties that you are trying to negotiate a loan on are free of all contamination.