Sometimes investing in a property, especially an oil field property can come with a very high risk. Previous environmental problems could lead to future problems for soon-to-be property owners. That’s why many real estate companies and bankers suggest an environmental site assessment before potential buyers purchase a property.
What Is Due Diligence?
Potential buyers are often encouraged, if not required, to conduct environmental due diligence, as it protects themselves and the lenders from possible problems. This step in the acquisition process helps to verify that the property is in a good condition, as well as it helps to eliminate any concerns around the purchase of the property. Environmental due diligence works to identify potential risks and quantify the risks identified.
What Happens During Due Diligence?
Environmental due diligence includes an environmental site assessment. This is where an environmental consultant comes to the site and conducts an assessment of the entire property. This action includes:
- Physical inspection of property and surrounding properties
- Review of the historic land use and development of the property and surrounding properties
- Interviews with people knowledgeable of the site history
- Written report of all findings
Do You Need Due Diligence?
This ultimately depends on the amount of risk that you are willing to take on. The upfront time and expense of due diligence is much cheaper than finding a problem in the future. Much more, due diligence can help to identify long-term liabilities that could be very costly to clean up.
Often times, a property purchase can be the biggest purchase a person will make. Proper due diligence allows the potential buyer to make an informed decision.
Talon/LPE has conducted thousands of environmental site assessments and can walk you through the process. Contact Talon/LPE today using the button below for help with your next property purchase.