In July of this year, the ASTM committee updated the Transaction Screen Standard (ASTM E1528-22). The Transaction Screen is a limited environmental due diligence document designed to identify potential environmental concerns (PEC) at a piece of commercial real estate. It does not provide protections under the Comprehensive Environmental Response, Compensation & Liability Act. Still, it does attempt to provide valuable environmental information about a property, including salient data about the property, business activities, chemical use and storage, and identification of chemicals of concern (originating onsite or offsite) that could pose a PEC to the subject property.
The new Transaction Screen Standard impacts the Freddie Mac Small Balance Loans (SBL), Fannie Mae Small Mortgage Loans, and Fannie Mae Streamlined Underwriting (4099.A).
- Freddie Mac (as of 12/17/19) requires that the physical risk consultant must complete a transaction screen questionnaire substantially similar to the current ASTM E1528 standard to initially evaluate this risk.
- Fannie Mae Small Mortgage Loans allow an Environmental Screening of the Property using the ASTM E-1528 protocol.
- Fannie Mae Streamlined Underwriting allows an Environmental Professional to perform an environmental database review and identifies no PECs (as defined in ASTM E1528 – Standard Practice for Limited Environmental Due Diligence: Transaction Screen).
So, what’s different between the old standard (from 2014) and the new standard? How does it impact your small loan or streamlined PCA?
- A new term, “Chemicals of Concern” was added. This means hazardous substances, petroleum products or any specific compounds are subject to federal environmental laws and state cleanup responses. It intends to include PFAS and other emerging contaminants, but only in states where such regulations apply.
- The definition of Potential Environmental Concern (PEC) was revised to include “Chemicals of Concern.”
- The Transaction Screen Questionnaire (TSQ) was overhauled, increasing from three to nine pages.
- The Transaction Screen Questionnaire is divided into two parts. Part A is to be completed by owners and occupants of the subject property and Part B is for the environmental preparer. Part A is four pages and poses questions to the owner and occupants of the property to gain insights into onsite operations and any knowledge that these sources may have regarding environmental concerns onsite. Part B is a more intimate approach to property information and asks questions that can only be answered through a review of a regulatory database search report, historical sources review, and a site inspection.
- It is our goal to present the TSQ to the owner and occupant immediately upon award to maximize the amount of time needed for completion.
AEI’s Agency Team has performed thousands of GSE small loan and streamlined PCAs across the country. Our team of experienced building assessment and due diligence experts are ready to help you get your transation across the finish line. Contact Joe Novotny (jnovotny@aeiconsultants.com) or Sarah Feit (sfeit@aeiconsultants.com), Vice Presidents of AEI’s Agency Services Division for further information