If you’re in the process of buying or selling land, you’re probably thinking about price negotiations, inspections, and closing timelines. But here’s something that often gets overlooked—and it could cost you way more than a few weeks’ delay: the importance of environmental due diligence.
We’ve seen it happen too many times. A buyer is ready to close on a commercial property. The numbers check out. The location’s perfect. But then a Phase I Environmental Site Assessment (ESA) reveals an old, forgotten petroleum tank under the surface—and suddenly the deal is off the table.
Understanding the importance of environmental due diligence early in the transaction can protect both buyers and sellers from major financial and legal headaches. It isn’t just for industrial sites or gas stations. It’s a smart (and often necessary) step in most real estate transactions, especially when the property has a history. This guide will walk you through what environmental due diligence actually means, when it matters most, and how it can protect you from making a very expensive mistake.
What Is Environmental Due Diligence?
At its core, environmental due diligence is about making sure the land you’re buying—or selling—isn’t hiding any environmental surprises.
Phase I ESA: Your First Line of Defense
The most common type of due diligence is a Phase I Environmental Site Assessment. This is a non-intrusive assessment where an environmental professional reviews the property’s history, checks for red flags (like former industrial use), and visits the site to look for any signs of contamination or environmental concern.
It doesn’t involve any digging or sampling, but it gives you a clear idea of whether the property might pose a risk. If nothing concerning comes up, you get peace of mind. But if there are concerns, that leads to…
Phase II ESA: Digging Deeper
A Phase II ESA goes a step further. It involves collecting soil, groundwater, or vapor samples to confirm whether contaminants are actually present. These tests are targeted based on the findings of the Phase I ESA.
For example, if the Phase I reveals that the site used to be an auto repair shop, the Phase II might test the soil near where solvents or fuel tanks were stored.
Why Environmental Due Diligence Matters for Buyers and Sellers
The importance of environmental due diligence shows up most clearly when things go wrong. We recently worked with a client purchasing a small strip center. Everything seemed routine—until our team discovered that the property had once housed a dry cleaner. Decades ago, solvents like PCE and TCE were commonly used, and those chemicals can linger in soil and groundwater for a very long time. That discovery led to further testing and a cleanup plan—which was expensive, yes, but it saved the buyer from unknowingly inheriting a six-figure environmental liability.
For Buyers: Protect Your Investment
Environmental due diligence protects you from buying a problem property. Without it, you could be on the hook for cleanup costs, legal issues, or worse—your investment could lose value entirely.
It’s not just about avoiding toxic waste dumps either. Old fuel tanks, pesticide residues, asbestos-containing materials, or even mold problems can surface long after closing if they’re not addressed upfront.
For Sellers: Be Transparent, Be Prepared
If you’re selling, you might think, “This isn’t my problem.” But that’s not always true.
Buyers are more informed than ever—and lenders often require environmental assessments before they’ll fund the deal. Getting ahead of any potential issues (or at least being transparent about the site’s history) builds trust and can speed up negotiations.
What Happens If You Skip It?
Let’s be blunt: skipping due diligence is a gamble. And not understanding the importance of environmental due diligence can lead to costly surprises.
We’ve seen deals fall apart at the last minute, lawsuits arise over “hidden” contamination, and owners get stuck with costly remediation work they didn’t expect. The worst part? Most of these outcomes could’ve been avoided with a simple Phase I ESA.
Environmental liabilities aren’t always obvious. A patch of grass may look pristine—but five feet below could be contaminated groundwater. Due diligence ensures you’re not relying on appearances.
What’s Included in a Standard ESA?
If you’re wondering what you actually get when you order an ESA, here’s what to expect from a reputable environmental consultant:
Phase I ESA:
Site visit and photo documentation
Interviews with current or past property owners
Historical use review (aerial maps, fire insurance maps, permits, etc.)
Regulatory database search (EPA records, state environmental records)
A clear report identifying Recognized Environmental Conditions (RECs)
Phase II ESA (if needed):
Soil sampling
Groundwater sampling
Vapor intrusion assessments (especially for buildings)
Lab analysis
Recommendations for remediation, if required
The reports are designed to meet ASTM standards and are accepted by most lenders and regulatory agencies.
Cost vs. Risk: Why It’s Worth It
We get it—no one loves adding more expenses to a property deal. But here’s the reality:
Phase I ESA cost: ~$2,000–$3,500
Phase II ESA Cost (if needed): ~$5,000–$15,000+ depending on site complexity
Cleanup/remediation if you skip it: Potentially $50,000 to $500,000+
One of our clients once inherited a $120,000 cleanup project after closing on an industrial property that hadn’t gone through proper due diligence. That’s not the kind of surprise you want after spending months lining up financing and negotiating a deal.
Think of an ESA like insurance: it’s a small upfront cost that could save you hundreds of thousands later.
When Should You Start the Process?
As soon as you go under contract—or even better, before. Environmental due diligence takes time. Phase I ESAs usually take 2–3 weeks. If a Phase II is needed, that could add another few weeks depending on lab timelines and access to the site.
The earlier you start, the more time you have to make informed decisions without delaying the closing.
How to Choose the Right Environmental Consultant
Not all ESA providers are the same. Look for a firm with:
Licensed environmental professionals (LEPs, PGs, PEs)
Experience with your property type (commercial, industrial, undeveloped)
Transparent pricing and clear deliverables
Fast turnaround times (especially if you’re on a deadline)
Willingness to walk you through the results in plain English
Final Thoughts: Don’t Overlook the Importance of Environmental Due Diligence
Whether you’re purchasing a small piece of land to build a dream home or selling a commercial property you’ve owned for decades, understanding the importance of environmental due diligence is one of the most critical steps in protecting your investment.
Our team at CRG Texas Environmental Services Inc. has helped hundreds of property owners, investors, and developers across Texas navigate this process. We believe in giving people the knowledge—and confidence—they need to move forward.
Don’t underestimate the importance of environmental due diligence. Know what you’re buying. Know what you’re selling. And don’t close without the facts.
Need help getting started with your environmental due diligence?
We’re here to help. Contact CRG Texas Environmental Services Inc. today for a consultation.