Why is it so hard to get borrowers to do environmental?

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Why is it so hard to get borrowers to do environmental?

We work with lenders as our primary clients and often within their small business lending area. Our primary role is to help our lender clients manage the environmental process by conducting reviews of existing environmental reports and also by providing environmental screening products to help them figure out if there is an environmental problem or not at their property.

However, despite determining whether environmental issues seeming like an obvious level of due diligence to conduct on a piece of commercial real estate (think auto body shops, manufacturing facilities, dry cleaners, offices, etc), it is amazing how often the environmental due diligence becomes a sticking point for deals. Often the borrowers just don’t want to spend any extra money to find out whether or not there is a problem at the site. However, the borrowers, especially small businesses, have the most to lose if they buy a piece of property with environmental issues on it when it comes to operating the property, but even more so when they go to sell the property. The property they think is worth $750,000 might be worth much less than that when they discover there are outstanding issues at the property that they failed to research when buying the properties.

So my question is, how do we as an industry help to teach these often unsophisticated borrowers that the money spent on “environmental” is worth the money?

 

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