Environmental (alternative)
When purchasing commercial property in Maryland, a Phase I Environmental Site Assessment (ESA) is primarily used to:
ATest soil and groundwater for contamination
BIdentify recognized environmental conditions (RECs) through records review and site inspection✓ Correct
CDetermine property value adjustments for environmental risk
DSatisfy MDE remediation requirements
Explanation
A Phase I ESA identifies Recognized Environmental Conditions (RECs) through historical records review, site inspection, and interviews—without physical sampling. If RECs are found, a Phase II (sampling) may follow.
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Key Terms to Know
Capitalization Rate (Cap Rate)
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
ZoningLocal government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
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