USTs found - bracing for Phase II environmental

I’ve been working a deal for now 2 yrs. Bank commitment received (subject to Phase I), due diligence done, etc. Bank’s enviro team heard from park manager that there were 2 USTs (heating oil) removed over 10 yrs ago. 275 gallons/ea (too small to require registration with DEP). Purportedly impacted soils that were removed and replaced. No paperwork anywhere to support it. Luckily, the soils are clay, which would have contained seepage.

How do I proceed with the seller?
Any chance the lender will do the deal w/o requiring a Phase II?
How much could remediation cost? (I have a $5-10K estimate for the soil borings and testing)

Any help is appreciated!!!

A park we presently own had fuel tanks for the marina and the state regulator commission pay us a visit we had to remove them with a state approved person. We paid $5,000 and in our state any think over that amount is paid by the state. Since the state did not have more funds they signed off that the property was clean and met fed standards and would pass a phase one even thought we know the work was not complete but the state officials stamped work complete and met requirements. With that being said meet the right people and the problem is solved–find a regulators making a name for him self and the problem could be nasty… You need the SELLER to fix the problem and if the deal is good might share some of the cost at closing. Do not avoid a phase one–the next buyer could be really difficult to sell too when now as an ethically person you need to make full make disclosure of what you know!!!

I bought a former gas station with UST’s that were removed back in the 1990’s and had minor soil impacts as well, but the State procedures were very loosely applied back then and have since clamped down. The property was priced very low as the Seller knew it was a problem but did not want to deal with the headache, and I took the risk to pay for the Phase 1 and 2 ESA out of pocket with the possibility of walking away if remediation costs would be prohibitive. The results came back within State guidelines and we proceeded to close. I probably will never do this again.

Also, some states come back and double check properties that they said were previously clean decades ago and perform another test to make sure that’s the case with a closer lens as their procedures change significantly - the “good ole boy” procedures are being retired regularly as the EPA provides further scrutiny. It’s important to have the results of a Phase 1 and 2 to CYA, irrespective of what the State tells you.

I agree with @carl that your best option is for the Seller to cover the cost of the Phase 2 and the results being within guidelines (under the State limits for contamination levels) are the contingency to close. Option 2 is that the Seller provides significant concessions for you to pay for this out of pocket - and you run the risk that the contamination levels are elevated and require remediation by the State, but if they are in range then the risk may be worth it. If there is elevated contamination the price to remediate can be a revolving door and not sure that’s something you want to go through. Dealing with monitoring wells and state government types every quarter is not something you have to do and virtually nobody here would recommend that.

I think it’s appropriate to mention that Frank and Dave would have already walked away from this deal based on their due diligence materials. They also recommend Mike Renz at (614) 538-0451 for all their environmental diligence. You may want to give him a call and get his opinion.

Oh, and a reputable lender will not proceed without the Phase 2 confirming the status of this issue. My Phase 2 cost 12K for about 8 borings around the affected area plus a couple extra to detect any offsite impacts via the water table.


If my memory is correct, once you own a polluted property, you remain liable for the damages, personally, forever. This makes it very difficult to sell a property with storage tank or other pollution liability. Check with Mr. Renz for more detail. He should be a great source.

The exception is if you get a Phase 1 or 2 in your name and get an innocent owner certificate from the state DEQ.

Agree that marketability can be affected. My environmental engineers told me with superfund sites and brownfield sites that the EPA and DEQ’s can control appropriate usage of the site and development can be a lengthy and challenging paperwork process.

There are some very former polluted sites converted into golf courses and other useful developments, but you can guess people won’t be growing vegetables there anytime soon, or have their kids playing in the sandbox.

This is why most polluted sites are trucking terminals, storage lots, and the sort…

You definitely need Mike Renz – that’s his specialty. We have had similar deals that he has solved for us.