If anything comes up in the Phase 1 environmental report that indicates the presence of hazardous materials, a Phase 2 is usually needed. A common dealbreaker for any real estate transaction is the presence of a Recognized Environmental Condition (REC), which can be found during a Phase 1. A REC is the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property. Some RECs include dry cleaners, auto repair facilities, underground storage tanks, or even a toxic radioactive dump site.
Although a REC can be a dealbreaker, the regulations were updated in 2013 to make it possible to clear a property with a Recognized Environmental Condition for unrestricted use under certain conditions when the contamination is deemed to be sufficiently contained and controlled.