Hotel and motel environmental due diligence: what to check before you buy
Hotels run a laundry, a boiler room and a pool, and highway motels often share an exit with truck stops.
Why hotels and motels carry this risk
Onsite laundries, pool chemicals and boiler or generator fuel are the usual items. Older motels sometimes ran their own dry cleaning.
Highway locations put many motels next to truck stops and gas stations, and coastal hotels face flood exposure that grows over the loan term.
What usually turns up
Fuel stations at the same exit
Worth checkingLeaking tanks at neighboring truck stops and stations are a common finding for highway motels.
Flood exposure on coastal sites
Often seriousCoastal hotels may sit in V zones with wave action, the most expensive flood insurance there is.
Boiler, generator and laundry
Usually minorFuel tanks and chemical storage in service areas. Usually small, but lenders ask.
What the pre-screen checks for a hotel
- Tank and cleanup records for the site and the surrounding exit or strip.
- FEMA flood zone, including coastal V zones, for each building.
- Historical aerials for past uses of the parcel.
- Hazardous waste records for the operator.
Pre-screen a property before you spend on a Phase I
A desk review of one address: past uses from historical photos and maps, federal and state environmental records, and flood risk, ready usually within the hour. $100 for one report, or $100/month for 3.
Questions to ask the seller
- Is there a generator or boiler fuel tank, and is it above or below ground?
- Was laundry or dry cleaning ever done on site?
- Any flood claims or storm damage in the last ten years?
- Any prior Phase I from the last brand conversion or refinance?
When to order a full Phase I
Order a full Phase I when a lender or brand requires it, or when the pre-screen shows a station or open case next door.