Caveat emptor - Buyer beware

The due diligence process is codified in the federal regulations as All Appropriate Inquiries (AAI), which is called a Phase 1 Environmental Assessment. To qualify for an ILO, the AAI must be performed or supervised by an Environmental Professional (EP). The AAI requires Historical documentation reviews, Visual inspections of the facility and adjoining properties, Environmental lien searches, and An assessment of the relationship of the purchase price to the fair market value of the property. A professionally prepared Phase 1 report will generally cost several thousand dollars or more, depending on the size and history of the commercial property. A recent Michigan case illustrates the risks associated with the failure to conduct proper due diligence. The buyers relied on the newspaper article and the sales brochure and did not perform their own due diligence before closing the deal. In this case, the jury determined that the buyers were partially responsible for their damages because they had failed to perform their own due diligence.