What would it cost to clean? If the cost is minor relative to the value of the property then the lender can mitigate this with a holdback or lower loan to value.

What is the source of the contaminant, is it on site or off site, and has it been dealt with? Any lender would prefer that the source has been removed.Is the contaminant in the soil or groundwater or both? Generally speaking we are less concerned with soil contamination, as we can dig it out and dispose of it if needed. Water is less obedient and poses more challenges so soil contaminated properties have a better chance of getting financed.You would have to read the report carefully (because we will!) and look for words in the recommendation or action plan like “potential liability” or “remediation plan”. This is what the lender will key on, and you will likely have to continue with the next stage of the iterative process if you wanted to obtain financing on the property. In the event the review of the property’s history identifies something that might have caused contamination, (underground storage tanks, dry cleaning operations, body shops etc) then tests are ordered and analyzed in a Phase Two study. This normally involves drilling holes and collecting soil and water samples and comparing them to acceptable levels as laid out by the MOE. As long as the levels are below the applicable standard, then your lender is happy.īut what if the levels are above the standards set by the MOE, can you still get financing? The first trip to the doctor for an environmentally challenged property is called a Phase One study. Ask some questions, get a history of the property, and try to assess if there is a risk from any past uses (or adjacent uses) that might cause concern. If nothing is identified that causes concern, you have the clean bill of health and your lender is happy. The key lies in the conclusions and interpretation of the environmental report provided on the property. Keep in mind the investigative process of an environmental assessment is “an iterative process”, similar to a doctor’s visit. You see your doctor, answer some questions, and they either draw conclusions from those answers or they order tests for more information. This test data can either generate a conclusion, or result in the need for further tests before a final diagnosis is provided. What used to be an automatic “no” has evolved into a response of “it depends”. We are often asked “can I finance a property with environmental contamination”?

Bruce knighthood