Due Diligence + Transactions

The due diligence process during property transactions is vital to minimize exposure to environmental cost and liability. Pangea has provided due diligence services for owners, banks, trusts, attorneys, developers, real estate firms, service station dealers, and public agencies. While no two due diligence projects are identical, the process and issues remain similar. Pangea works closely with our clients to understand their objectives, risk tolerance, and cost sensitivity, based on involvement with our client’s realtors, legal counsel, lenders, partners and others.

Expedited service is critical to satisfy due diligence periods for most property transactions. Pangea uses various strategies to expedite due diligence to meet our client’s needs. As a small company with robust field services, we can often perform initial Phase II testing within days of retention and often in conjunction with preliminary database research or Phase I completion.


Pangea has experience helping both buyers and sellers navigate the transaction process. Pangea frequently helps further assess, remediate or mitigate site conditions to complete the transaction and pursue regulatory case closure or satisfy long-term O&M management plans.

Our due diligence services frequently involve one or more of the following: 

  • Research of available information, databases, records 
  • Phase I Environmental Site Assessments per ASTM 1528 
  • Transaction Screens per ASTM 1528 
  • Phase II environmental testing 
  • Estimation of future compliance/remediation costs 
  • Funding source evaluation and application assistance 
  • Agency interaction (when authorized) 
  • Phase III remediation (when required) 
  • Transaction assistance with involved stakeholders

Research is essentially a ‘paper study’ of available records to evaluate the likelihood of significant chemical impact beneath a property. Phase I assessments can help provide CERCLA liability protection under innocent landowner defense provisions; Transaction Screens, which are faster and less costly, do not.  


Phase II testing involves collection and analysis of site media (e.g., soil, soil gas, groundwater and sometimes indoor air). Subslab gas sampling is common quick and inexpensive testing method. Testing helps confirm that historical operations at the site or vicinity have not  impacted the site with hazardous substances. 


Cost estimation is performed upon the discovery of subsurface concerns to assist with transaction negotiations. Our extensive experience with local agencies helps facilitates the cost evaluation process and the engagement of agencies (if requested).  


In this sample project, the seller’s Phase I&II only found one small issue of MTBE contamination. For the buyer, Pangea discovered an estimated $2 million in environmental liability from PCBs, PCE, TCE, MTBE, Diesel, and Class I hazardous waste lead. Thanks to Pangea’s work, the buyer and seller shared the costs and risks to facilitate completing the transaction.


Because the due diligence process can discover site contamination that triggers response actions, agency notification, and possible new environmental cases, Sellers and Buyers typically consider the following initial questions when entering the due diligence process: 

  • Will Seller perform due diligence before marketing the property to control the process?
  • Will Buyers be granted access to conduct Phase II testing, if requested?
  • Will Buyer be required to keep any Phase II data private and not disclose any Phase II data to agencies that could otherwise trigger agency oversight?
  • Does Buyer seek CERCLA liability protection under innocent landowner defense provisions?
  • Does Seller obtain insurance prior to identifying known conditions on their property?

When Phase II testing identifies contamination, transaction challenges can arise that delay or complicate the transaction. At that juncture, Pangea often assists our clients and their stakeholders with the following issues and questions:   

  • What is the estimated cost to address the contamination?
  • Is a lender willing to fund the project?
  • Is additional testing necessary to better understand conditions/cost and who pays for the additional testing?
  • Will parties be allowed to obtain agency feedback to evaluate future cost and liability?
  • Is Buyer willing to purchase property with/without an agreeable discount? 
  • Will Buyer accept responsibility for cleanup and release Seller from liability?
  • Will Seller retain responsibility and indemnify the Buyer?
  • Are parties willing to negotiate and enter creative agreements that share risk, cost, and responsibility with assistance from their stakeholders?

Phase I environmental site assessments are conducted to standards established by the American Society of Testing and Materials (ASTM E 1527), and classify potential concerns as (1)  recognized environmental concerns (RECs), (2) controlled recognized environmental concerns (CRECs), or (3) historical recognized environmental concerns (HRECs).   When quicker or less costly research is acceptable, a Transaction Screen can be conducted in general accordance with ASTM E 1528, Practice for Environmental Due Diligence: Transaction Screen (TP) Process.