Due Diligence and Site Appraisals

Due diligence and site appraisals are essential for identifying and assessing potential environmental and geological liabilities associated with a property prior to a transaction. These assessments help buyers, investors, and developers make informed decisions by understanding the risks, constraints, and opportunities related to the site. The main purposes include: 

• Identifying potential contamination, pollution, or other environmental issues 
• Assessing the site’s geological and geotechnical conditions 
• Evaluating compliance with environmental and planning regulations 
• Estimating potential costs for remediation or mitigation measures 
• Supporting negotiations and decision-making in the transaction process 
• Planning for future development or redevelopment of the site 

During due diligence and site appraisals, a wide range of environmental and geological issues can be identified, including soil and groundwater contamination from previous land uses or activities, presence of hazardous materials, potential for ground instability or subsidence, flood risk and drainage issues, ecological constraints, regulatory compliance issues, geotechnical constraints for foundation design, potential for ground gas or vapour intrusion, and presence of buried structures or underground storage tanks. 

A Phase 1 Desk Study is a preliminary risk assessment that involves the collation and review of published information about a site’s historical, geological, and environmental setting. It aims to identify potential issues and assess the initial risk level, guiding the planning of subsequent investigation stages. Phase 1 studies are typically non-intrusive and rely on available data sources. 

In contrast, a Phase 2 Site Investigation is undertaken when potential issues are identified during the Phase 1 assessment. It involves intrusive sampling and testing of soil and groundwater to obtain detailed information on the site’s conditions. Phase 2 investigations aim to characterise the nature and extent of any contamination or geotechnical concerns, providing the data needed for risk assessment and remediation planning. 

Due diligence and site appraisals provide valuable information for managing risks and liabilities associated with land transactions. By identifying potential issues early in the process, these assessments allow buyers, investors, and developers to: 

• Make informed decisions about the feasibility and viability of the transaction 
• Negotiate better terms or pricing based on the identified risks and potential costs 
• Plan and budget for necessary remediation, mitigation, or development works 
• Ensure compliance with environmental and planning regulations 
• Avoid or minimise future liabilities and costs related to environmental issues 
• Develop effective risk management strategies for the post-acquisition phase 

Due diligence and site appraisals rely on a wide range of information and data sources, including historical maps, aerial photographs, land use records, geological and hydrogeological maps and data, environmental databases and regulatory records, planning and development history documents, previous site investigation reports and remediation records, interviews with site owners, occupants, and local authorities, site inspections and walkovers to assess current conditions, and intrusive sampling and testing data (for Phase 2 investigations). 

Lucion’s team of experienced environmental consultants, geologists, and engineers can support you throughout the due diligence and transaction process by: 

• Conducting thorough desk studies, site inspections, and risk assessments 
• Providing clear, concise reports that highlight key findings and implications 
• Identifying potential liabilities, constraints, and opportunities for the site 
• Recommending further investigations or mitigation measures where necessary 
• Reviewing regulatory compliance and planning considerations 
• Assisting in negotiations and decision-making with technical insights and advice 
• Developing post-acquisition strategies for development, remediation, or risk management 
• Providing tailored solutions that meet your specific needs and timescales 

Our team works closely with your legal, commercial, and technical advisors to ensure a smooth and successful transaction process, helping you to minimise risks, maximise value, and achieve your objectives. 

Environmental due diligence is typically conducted for commercial and industrial properties, as these properties have a higher likelihood of environmental contamination due to their historical or current use. However, environmental due diligence may also be necessary for residential properties, particularly if they are located in areas with known environmental issues or if they have a history of non-residential use. Properties that commonly require environmental due diligence include: 

• Industrial sites 
• Manufacturing facilities 
• Warehouses and storage facilities 
• Gas stations and automotive repair shops 
• Dry cleaners 
• Agricultural properties 
• Brownfield sites (previously developed properties with potential contamination) 

Environmental due diligence provides valuable information about the property’s environmental condition and potential liabilities. This information can be used to negotiate favourable transaction terms, such as: 

Price adjustments 

If significant environmental issues are identified, the buyer may negotiate a lower purchase price to account for the estimated remediation costs. 

Indemnification provisions 

The buyer may seek indemnification from the seller for identified environmental liabilities, protecting them from future costs and legal responsibilities. 

Escrow accounts 

Funds may be set aside in escrow to cover potential environmental remediation costs, ensuring that the buyer is not solely responsible for these expenses. 

Contingency clauses 

The transaction agreement may include contingency clauses that allow the buyer to terminate the deal or renegotiate terms if significant environmental issues are discovered during due diligence. 

Phase II confirmation sampling is necessary when the Phase I Environmental Site Assessment (ESA) identifies potential contamination issues or recognises environmental conditions (RECs) that require further investigation. Phase II involves the collection and analysis of soil, groundwater, or building material samples to confirm the presence, nature, and extent of contamination. This helps in quantifying the environmental risks and determining the need for remediation or mitigation measures. 

Environmental due diligence is conducted to identify and assess potential environmental risks and liabilities associated with a property prior to a transaction. It helps buyers, sellers, and investors make informed decisions by understanding the environmental condition of the property, potential contamination issues, regulatory compliance status, and estimated costs for remediation or mitigation.