In the world of commercial real estate (CRE) transactions, few phrases can stop a deal in its tracks like Recognized Environmental Condition — or REC. For banks and CRE buyers, understanding RECs and how to address them isn’t optional; it’s essential. At A3 Environmental Consultants, we help you navigate the landscape, from identification to resolution, so your transactions stay on track.
What is a REC?
A REC, as defined by ASTM E1527-21, is the presence or likely presence of hazardous substances or petroleum products in, on, or at a property that may affect its value or pose a risk. RECs typically fall into one of three scenarios:
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A known release to the environment.
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Conditions that indicate a release.
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Conditions that pose a material threat of a future release.
When one appears in a Phase 1 Environmental Site Assessment (ESA), it’s a red flag for lenders and buyers. The most common way to clear it? Conducting a Phase 2 ESA — which uses soil, groundwater, and vapor sampling to confirm or dismiss the concern.
Gnarly to Nice
HRECs & CRECs
The standard also identifies:
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Historical Recognized Environmental Conditions: Past releases addressed to regulatory satisfaction, allowing unrestricted use without ongoing controls.
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Controlled Recognized Environmental Conditions: Past releases addressed with regulatory approval, but with ongoing property use restrictions or controls.
CRECs require compliance with controls.
Clearing Process
At A3 Environmental Consultants, we follow ASTM E1527-21 standards, producing reports accepted by lenders, SBA, HUD, USDA, and regulatory agencies. Our process includes:
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Performing Phase 1 ESAs nationwide.
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Performing targeted Phase 2 ESA sampling in the greater Chicago area.
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Delivering clear, lender-friendly reports with actionable recommendations.
Why Environmental Concerns Matter to Banks and Buyers
For banks, they mean higher lending risk. For buyers, they can mean unforeseen remediation costs. Clearing them early:
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Protects property value.
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Reduces liability.
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Speeds up closing.
Chicago Focus for Phase 2 ESA
Our Phase 2 ESA services are Chicago-focused, leveraging local regulatory knowledge and Illinois EPA guidance. This regional expertise accelerates approvals and ensures accurate results.
Resolution
A REC doesn’t have to kill your deal. With the right expertise, it becomes a solvable step in due diligence. Whether you’re a bank protecting an investment or a CRE buyer safeguarding your purchase, A3 Environmental Consultants clears the way forward.
Need REC assistance? Call (888) 405-1742 or email Info@A3E.com.
