Understanding Environmental Due Diligence for Safe Property Investments

Environmental Due Diligence: What It Is & Why It’s Important

Every property must be assessed for environmental and financial risks before being sold or bought. Without proper inspection, a property may unknowingly violate government regulations because of hazards like contaminated land or unsafe water. This is where environmental due diligence comes in. 

Environmental due diligence is not just a requirement, it’s a beneficial process for clients involved in property acquisition and development. An environmental due diligence assessment helps buyers and sellers understand the long-term pros and cons of a property, and it can create a plan for solving any current issues with the property. 

The environmental due diligence checklist answers all questions regarding liability, risk and potential returns. At AQUALIS, we specialize in these inspections—in this article, we will cover when environmental due diligence is required, the different types, the process and why it’s important. 

What is Environmental Due Diligence?

Environmental due diligence is the evaluation of a property’s environmental conditions and associated risks. On-site due diligence inspections are often requested by land developers, attorneys and real estate agents who wish to purchase or occupy a property. 

When is it Required?

Environmental due diligence is often required before a real estate transaction. Commercial lenders and real estate professionals receive a full risk report on a property to understand its potential benefits, downsides and environmental concerns. Environmental due diligence assessments are also required before refinancing a loan or accepting collateral for a construction loan. 

Government agencies will also require due diligence reports before funding real estate and land improvement grants. 

2 Types of Environmental Due Diligence

There are two types of environmental due diligence. Both detail a property’s current and future health, allowing the buyer and seller to properly negotiate its sale. 

1.) Traditional Environmental Due Diligence (TEDD)

Traditional Environmental Due Diligence focuses on identifying and treating hazardous materials and pollutants. 

2.) Natural Resources Environmental Due Diligence (NREDD)

Natural Resources Environmental Due Diligence allows for proper identification and permission of natural resources like wetlands, endangered species and air quality. 

Why is Environmental Due Diligence Important?

Environmental due diligence ensures safety for the environment, your property and future investments. An on-site due diligence inspection removes doubt about properties and can lay out the necessary measures for remediation if needed.

Here are some ways an environmental due diligence inspection can benefit buyers and sellers:

• Interested parties avoid buying a property with environmental liabilities.
• Existing environmental issues can be resolved.
• The property can be sold in the future.
• Investors can be protected from legal and financial liabilities. 
• The property’s condition can be fully understood, and compliance with environmental laws is assured. 

Types of Environmental Risks

Environmental due diligence is important because there are three types of environmental risks:

• Direct: Concerns remediation costs and regulatory requirements.
• Indirect: Concerns potential impacts on property value and revenue costs.
• Reputational: Concerns stakeholders and their confidence in a property’s environmental management. 

An environmental due diligence inspection will mitigate concerns over a property’s environmental risks, or it will reveal that a property is not fit for sale. Regardless, environmental due diligence is required by buyers and sellers because it creates a clear picture of future pros, cons and investment opportunities.

At a base level, environmental due diligence is research. Any good investment requires thorough research, which is why an on-site inspection is almost always asked for.  

What’s Included in an Environmental Site Assessment?

An on-site environmental due diligence assessment can include various steps, but the more thorough it is, the more buyers and sellers can be assured of a property’s quality.

An environmental site assessment can be customized to specific situations and ecosystems, but a typical assessment from AQUALIS may include the following:

• Reviewing historical records and regulatory databases, including prior land use history.
• Interviewing current and former property owners.
• Identifying nearby sensitive habitats.
• Reviewing site plans.
• Evaluating contamination in groundwater and soil.
• Exploring the composition and disposal of construction materials.
• Checking with regulator bodies about past spills or fire incidents.
• Evaluating the current health of the stormwater system

Protect Your Investment with AQUALIS’ Due Diligence Inspections

Reducing and understanding risk is one of the most important facets of the real estate industry. Before buying or selling a property, one must understand where its potential issues and rewards lie, along with what can be done to guarantee a high chance of successful investment. 

AQUALIS has partnered with real estate professionals for years to guarantee safe investments and safe environments, marrying financial and eco-friendly solutions for a better future. A better future relies on a better environment, not only for the natural world but for the man-made world, too.

Maximize Property Value with AQUALIS’ Environmental Due Diligence Services

AQUALIS invests in green solutions that bring huge rewards to investors and real estate professionals. Our environmental due diligence inspections detail a property’s compliance, safety and risk, and we can draft sustainability and remediation plans for your property if necessary. Our comprehensive research and on-site work create clear visions of your property’s future, so you can properly forecast your long-term benefits or losses before making decisions.

To request an environmental due diligence inspection from AQUALIS’s experts, you can contact us online or call us at (888) 590-9685.