Environmental Lien and AUL Basics

The American Society of Testing and Materials maintains standards for Phase I environmental site assessment reports, and environmental liens. For professionals who provide these Phase 1 ESAs, an element of the accepted “All Appropriate Inquiries” includes searching title records for the subject property. AFX Title Search, an authority on title searching since 1995, offers title search products tailored for these ESAs. Providers typically require searching for the following items.

• Environmental liens
• AULs
• Ownership history

The standard specifies “environmental liens” by name, making it a crucial piece of included data in a Phase I ESA. However, obtaining environmental lien records for a particular property is a complex process. Initially, ESA providers turned to traditional real estate title abstractors to compile these search results. AFX has found that environmental liens, and activity and use limitations, often are found in places outside the scope of a traditional real estate title search.

Why an environmental lien is not a typical property lien

The definition of an environmental lien is much more broad in scope than a typical “property lien”. Real estate liens are clearly defined, and are located using traditional title searching methods, which have been used for decades. In addition, conventional real estate liens have a recording and indexing mechanism relatively uniform across various jurisdictions of municipalities, usually counties. Environmental liens are different in many ways. The types of records that can be classified as environmental liens come in a wide variety, and are recorded in dozens of dissimilar manners.

Originally, an environmental lien was a financial record of a debt, or financial liability, matching the obligation of a property owner to correct environmental damage. A simple example is a lien of a specified dollar amount, in response to a chemical spill at a property, with the dollar amount corresponding to the amount required to rehabilitate the property to its pre-spill condition.

Since the introduction of the new ASTM standard in 2005, and its requirement since 2006, many other types of remedial records have been issued as environmental liens and AULs. Governmental and private agencies are now recognizing that environmental liens and AULs are scrutinized as part of a property financing or transfer. These records are now deemed part of a property’s potential liabilities which must be addressed by the settlement system, as part of any property transaction. Because of this, interested parties outside the normal environmental oversight entities are more often using environmental lien filings as a method to advance their interests. Since the resolution or acknowledgement of environmental liens is a contingency of a transaction, issues that were once disregarded for lack of an enforcement method are now being considered under the umbrella of environmental liens, or AULs.

Where these records are found

Due to these changes, searching for environmental liens must go beyond the scope of a one-source research project. Environmental liens are no longer found only within the property records index. Items which could be considered to be an environmental lien can now be listed in dozens of systems and records offices. Searching for environmental liens therefore requires a good-faith effort to locate these records in various places. The locations of the listings and documents varies by jurisdiction, and the type of property. A few examples of locations where environmental liens can be found are:

Choosing a provider

Quality vendors are not in abundant supply. Although there was some interest prior to 2005, searching for these records did not become common until late 2006. Most traditional real estate title researchers are not interested in this type of work, due to its low-margin and tedious nature. The records are scattered across many different offices, and these searchers are accustomed to going to one records room to pull documents. Specialty environmental lien searching is a relatively new industry. AFX Research, LLC and EnvironmentalLiens.com have been at the forefront of this industry since its inception.

Selecting a quality provider of environmental lien searches is an important part of creating an ESA. Be sure your provider understands the depth of this area of knowledge, and has the appropriate experience. Talking to a representative from a provider, and asking a few probing questions, is usually enough to determine if the provider is knowledgeable.