Recognized environmental condition (REC)

Definition

What a Phase I actually reports: a sign contamination may be present.

Why It Matters

The report is not the finding. A Phase I either comes back clean or names one or more of these, and everything a buyer does next hangs off which: a Phase II to put a number on it, an indemnity from the seller, a holdback against the price, or a walk. The clock matters as much as the finding, because the federal all-appropriate-inquiries rule that earns a buyer the landowner defense puts an age limit on the report, so a study the seller commissioned well before the process started can be worth nothing to the person closing. Ask for the report itself and the date it was signed, and read what it says about the neighbours: contamination arrives by groundwater and does not respect a property line.

In numbers: A $50,000 escrow against a $2M price is 2.5% of it, which is the shape one unresolved condition commonly takes.