Tuesday, November 5, 2013

What Is the Process of a Property Transaction Screening?

Property transaction screening helps to identify potential environmental concerns with a property. It is mainly used by parties who are interested in fulfilling the Small Business Association (SBA) environmental due diligence requirements and to ensure that a property is cleared for a real estate transaction. The goal is to determine whether a particular property has the potential for contamination. The assessment is generally conducted before a property is bought or sold and before a loan is issued against the property.

During the property transaction screening process, owners and the occupants of the property are interviewed. In addition, the property site is thoroughly inspected and government records and historical sources are reviewed. The interviews are based on questions from a transaction screen questionnaire and the directions for the site inspection are also provided in this questionnaire.

Any transaction screen would consist of a site inspection with digital photo documentation, underground tank agency record search and review and a report filled with recommendations and conclusions. These measures are specifically designed for residential properties, commercial establishments, such as offices and retail stores, and undeveloped land.

Fannie Mae actually published a snapshot about a decade ago of what a property transaction screening questionnaire would look like. Here is a brief look at some of the questions:

- Is the property or any adjoining property used for an industrial use?
- Is the property or any adjoining property used as a gasoline station, motor repair facility, commercial printing facility, dry cleaners, photo developing laboratory, junkyard or landfill, or as a waste treatment, storage, disposal, processing, or recycling facility?
- Are there currently, or to the best of your knowledge have there been previously, any flooring, drains, or walls located within the facility that are stained by substances other than water or are emitting foul odors?
- Does the property discharge wastewater on or adjacent to the property other than storm water into a sanitary sewer system?

The historical evaluation reveals how the property has been used in the past and whether oil or other hazardous materials have been stored or handled at the property in question. Information about whether the property is listed in the State or Federal Environment related database is also assessed. Any spills or releases or information about hazardous materials on nearby properties is also obtained. The property transaction screening process does not include soil or water sampling.

The information that is derived from this assessment indicates whether further inquiry is required or not. The primary purpose of transaction screen assessment is to assist clients in identifying potential environmental concerns. These could include the presence of any hazardous substances, petroleum products or possibility of release of these hazardous substances into the property area, the ground or the surface water.

The Environmental Property Transaction Screen Assessments are widely accepted and are essential to meet the ATSM 1528-06 requirements. This assessment also helps gives more credibility to a real estate property that is up for commercial transaction.

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