Phase I ESA in Puerto Rico - Do you need one or not?
When it comes to purchasing or refinancing a property in Puerto Rico, many people want to know they're not putting money into a losing property. Just like buying a car without having it checked out ahead of time, buying a property in Puerto Rico without any sort of environmental due diligence, namely a Phase I Environmental Site Assessment, is a foolish move that may leave you stuck with unexpected, unwanted, and expensive surprises down the road.
The issue with getting a Phase I ESA, whether it's in Puerto Rico, Florida, or anywhere else within the United States, is that many people aren't sure what a Phase I Environmental Site Assessment really is. From costs to what they cover, there's a lot of information to understand, and this information is frequently presented incorrectly online.
So, let's jump in and cover some of the basics and answer whether or not you need a Phase I ESA in Puerto Rico.
Do I need a Phase I ESA in Puerto Rico?
The short answer is no. No, you do not NEED to get a Phase I ESA in Puerto Rico. You (as far as we can tell) don't NEED to get a Phase I in Puerto Rico, or for that matter anywhere within the United States. There are (again, as far as we know) no regulations or laws requiring you to get a Phase I ESA.
But...let's be crystal clear about this:
You SHOULD ALWAYS get a Phase I ESA in Puerto Rico if you're buying or leasing a property (regardless of type or past history), a business and its location, or the assets of a business. We cover the argument further in our article Do I need a Phase I Environmental Site Assessment?
Given the rich and long history Puerto Rico has had with industry, such as the petroleum industry, pharmaceuticals, and electronics industries, not to mention some defense sites, mining, cement production, etc., and you can see that there's ample reason to be concerned about the present and past history and possible contamination of that property you're considering! In fact, it's known that Puerto Rico has more than 150 contaminated sites that include 14 active Superfund sites, giving the island an unusually high concentration of contaminated sites. A tropical paradise, for sure, but one that warrants careful environmental due diligence.
Why should I get a Phase I ESA in Puerto Rico?
Think of it like going to a doctor. You could go a very, very long time without ever visiting a doctor and probably be ok. In reality, you should go visit a doctor every now and then to see how you're doing. By staying ahead of your health you can avoid big problems down the road.
Think of a Phase I ESA like going to a doctor for a checkup. A Phase I ESA is the same concept. An environmental professional would visit your site, conduct some interviews with certain people, pour through old records, and give you a report detailing their findings. They'd "check up" on the property in question and they'll let you know how it's "doing" in the form of a Phase I ESA report.
And, just like your health, a Phase I can uncover things today that can prevent you from having a big problem tomorrow. While a doctor can find things that might save your life, a Phase I ESA will find things that can prevent you from buying a contaminated property, which in the case of environmental cleanup, could cost you hundreds of thousands of dollars, or more, if you cannot prove you did not cause the contamination.
The Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA for short, has language in it that allows a property owner to be protected in case contamination is found at a piece of property, but only if and when the owner went through with appropriate environmental due diligence (aka a Phase I).
That might not be clear, so let me give you a hypothetical example. Suppose someone bought a property and got a thorough, complete Phase I ESA which followed the ASTM standard and which was done by an appropriate environmental professional. Suppose, for whatever reason, that there was something on the property which was never documented and could not be visually observed or suspected. Suppose that thing had caused some type of subsurface contamination which affected other properties, such as contaminating their wells. If the Phase I ESA was done correctly, and if it was done by an appropriate environmental professional, and if that environmental professional exercised good professional work, then the property owner may qualify for liability protection; in other words, may not be responsible for the costs of cleaning up that contamination and replacing neighboring wells. That's a lot of ifs, but you get the point. Without a Phase I ESA done correctly, someone would have been left holding the bag for a very, very expensive cleanup that wasn't even their fault! That's the protection that a Phase I offers.
I want to make this crystal clear right now - ASTM does NOT stand for American Society for Testing and Materials. It hasn't been called that since 2001, so if you hear someone call it that, run in the other direction since they likely aren't up to date on Phase I ESA standards and best practices.
If you want to read the standard, which is surprisingly easy to understand, I encourage you to grab a copy from ASTM International's website. It's $72, but you can read the standard yourself and when you eventually hire an environmental professional, you can be sure they're following the standard correctly.
As you can see, there's a lot to take in when it comes to getting a Phase I Environmental Site Assessment in Puerto Rico, or anywhere in the US. To learn more about Phase I ESA's in Puerto Rico, or if you have any questions, or need a quote on a property in Puerto Rico, click here to contact us or call us at 888-RMA-0230 to learn more.
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