What is an Environmental Transaction Screen Assessment?

An Environmental Transaction Screen Assessment is a limited demonstration of publicly available information, for better decision-making authority in real estate risk management. Lenders also refer to this report as a “TSA,” “Transaction Screen” or “Transaction Screen Review.” To sum up the process, these compilations are limiting due diligence reports for property loans with questionable environmental histories and land uses. In fact, the Small Business Administration (SBA) maintains specific prerequisites for dealing with low to moderate-risk properties, which include performing an Environmental Questionnaire and Transaction Screen Assessment. Updated April 9, 2024.

Environmental Transaction Screen Assessment Reports & The Other Options

An Environmental TSA must not be confused with a Phase I Site Assessment Report. Although, it is one of the many types of Limited Environmental Due Diligence Reports available. Nonetheless, it helps evaluate environmental risk, beyond the point of a questionnaire. At this moment, the SBA Program requires a Transaction Screen Assessment for 7(a) and 504 loans on low-risk properties. Otherwise, a Phase 1 Environmental Site Assessment becomes the requirement.

TSA Content & Limitations

An Environmental Transaction Screen can include job site inspections. However, unlike a Phase 1 ESA or Environmental Desktop Report, it is typically just a display of available public records and property history. The content within these reports is general, and conclusions aren’t typical. Moreover, the findings are restricted to the timeframe that the letter report is prepared. Thus, TSAs do expire quickly. Accordingly, no warranty, whether expressed or implied, can be made due to the limited circumstances.

Environmental Survey Questionnaire Beforehand

In most cases, an Environmental Questionnaire Survey precedes the necessity to perform a TSA. And depending on the outcome of the questionnaire, environmental professionals decide upon the necessity of a TSA, and/or a Phase 1 Environmental Site Assessment.

Scope of the TSA

TSAs are typically relatable to low-risk sites (properties with no suspicion of historical environmental concern). On the other hand, a Phase 1 ESA is usually the starting requirement for higher-risk properties, such as gas stations or dry cleaners. As a result, SBA lenders typically require an Environmental Transaction Screen Assessment on the lower-risk properties. For instance, an apartment complex that is adjacent to a gasoline station, or a vacant commercial lot near a dry cleaner. A full-scope Phase I Environmental Site Assessment Report meets the EPA’s All Appropriate Inquiry requirement and offers innocent landowner liability protection. On the other hand, a TSA report does not, and is simply applicable for better decision-making authority.

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