July 24, 2020
Your plans are made. The premise is set for your business and you embark upon site location. Lo and behold, you come across a vacant corner lot located in the middle of a commercial zone. Negotiations begin and before you know it, a letter of intent is executed and due diligence begins.
In a perfect world, professionals are engaged through proper legal channels — you include architects/engineers, your preferred broker at NFP, environmental consultants and your good friend who happens to be a commercial real estate broker for Avison Young. Legal works with your environmental consultant to formulate a scope of work that will lay the foundation for a Phase 1 Environmental Site Assessment. The consultant raves about their vast insurance program and how very well insured they are, then sends a final scope of work to you, the buyer, for execution.
Unfortunately, you and legal do not discover until after the fact 1) consultant has strong limitation of liability and liability is limited to cost of engagement, 2) no third-party reliance can be made upon Phase 1 and 3) Ground Penetrating Radar will not be utilized. Furthermore, the scope did not include a Freedom of Information Act request and failed to satisfy the minimum requirements for “all appropriate inquiry.”/p>
Download the full article to learn about the importance of due diligence, development, surprise and the true cost of risk.