Environmental
What is 'environmental due diligence' in Illinois commercial real estate transactions?
AFiling a disclosure form with Illinois EPA before purchasing commercial property
BInvestigations (typically Phase I and II ESAs) conducted before purchasing property to identify environmental liabilities and potential cleanup costs✓ Correct
CA required inspection of the HVAC system for air quality
DAn annual report filed with IDFPR for all commercial properties
Explanation
Environmental due diligence involves investigating a property's environmental history and condition before purchase to identify potential contamination and liability. The standard process begins with a Phase I ESA (records review, site inspection) and may proceed to Phase II ESA (soil and groundwater sampling) if concerns are identified.
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Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
State-Specific Concepts
Disclosure Requirements
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