Auto repair shops carry a higher likelihood of environmental considerations than most commercial property types, mainly due to decades of industry-standard use of underground storage tanks (USTs), hydraulic lift fluid, and solvents. That history doesn’t mean every auto repair property has a problem — most transactions close without incident — but it does mean environmental due diligence deserves real attention, whether you’re buying, selling, or leasing.
Why Auto Repair Properties Are Different
A few things make environmental due diligence more important for this asset class than for a typical retail or office building:
- Underground storage tanks. Older auto repair shops sometimes have USTs on site, whether active, decommissioned, or simply undocumented. Georgia’s Environmental Protection Division (EPD) regulates USTs, and unresolved tank issues can affect both financing and marketability.
- In-ground hydraulic lifts. Older in-ground lift systems used hydraulic fluid that, over decades, can migrate into surrounding soil if the system has degraded.
- Solvents and waste fluids. Historical disposal practices at older shops weren’t always consistent with today’s standards, which can leave soil or groundwater questions even at properties that look clean on the surface.
What a Phase I Environmental Site Assessment Covers
Most lenders — including SBA lenders — will require at least a Phase I Environmental Site Assessment (ESA) before closing on an auto repair property. A Phase I typically includes:
- A review of the property’s historical use, including prior owners and operators.
- A site visit to look for visible signs of contamination, storage tanks, or improper waste handling.
- A review of regulatory databases and records for the property and surrounding sites.
- A conclusion on whether further investigation (a Phase II, which involves actual soil or groundwater testing) is warranted.
A clean Phase I doesn’t guarantee there’s no issue, but it’s the standard first step and is generally sufficient for most transactions where nothing concerning turns up.
What Underground Storage Tank Removal Typically Involves
If a Phase I or property history indicates a UST is present, removal generally involves a licensed contractor excavating and removing the tank, testing surrounding soil, and — if contamination is found — remediation before the site can be considered clear. Costs vary significantly based on tank size, depth, whether contamination is present, and local disposal requirements, so we’re not going to publish a static number here that could be misleading for your specific property. If you’re facing a UST situation on a property you’re buying, selling, or already own, we can help you think through next steps and connect you with qualified environmental professionals — contact us to discuss your specific property.
What This Means If You’re Buying
Build environmental due diligence timelines into your purchase agreement and financing timeline from the start, not as an afterthought once you’re already under contract with a tight closing deadline. If a Phase I flags a concern, you’ll want contract language that gives you time and options — including the ability to walk away or renegotiate — before you’re committed.
What This Means If You’re Selling
If you know your property has environmental history — a former UST, an old in-ground lift, documented spills — disclosing it upfront and, where possible, addressing it before listing can prevent a deal from falling apart late in the process. Sellers who get ahead of environmental questions generally have smoother, faster closings than those who let a buyer’s Phase I be the first time the issue surfaces. If you’re considering a sale, our Sell Your Commercial Property page covers the broader process.
What This Means If You’re Leasing
Tenants aren’t automatically shielded from environmental liability just because they don’t own the property — depending on the situation and lease terms, operators can carry some exposure too. See our auto repair shop leasing page for what else to consider before signing.
This page is provided for general educational purposes only and is not environmental, legal, or engineering advice. Environmental regulations and requirements are jurisdiction-specific and change over time. Work with a licensed environmental professional and attorney for any property-specific environmental question.
Frequently Asked Questions
How much does it cost to remove an underground storage tank? Costs vary widely based on tank size, depth, accessibility, and whether soil contamination is found during removal. Because publishing a generic figure could be misleading for your specific situation, we recommend getting quotes from licensed UST removal contractors for your property — contact us and we can help point you in the right direction.
Do all auto repair shops have underground storage tanks? No. Many auto repair shops, especially those built more recently, never had USTs or have already had them properly removed. A Phase I Environmental Site Assessment will confirm the history for a specific property.
Is a Phase I Environmental Site Assessment required to buy an auto repair shop? Most lenders, including SBA lenders, require at least a Phase I ESA for auto repair properties given the industry’s environmental risk profile. Even in an all-cash purchase where it’s not required, we generally recommend one.
What happens if contamination is found during due diligence? A Phase II investigation (soil or groundwater testing) typically follows to define the scope of any contamination, followed by a remediation plan if needed. This can affect price, financing, and timeline — having contract language that addresses this scenario before you’re under contract is important.
Can I still get an SBA loan if a property has environmental issues? It depends on the severity and whether a remediation plan is in place. Some environmental issues can be resolved as part of the closing process; others may require remediation before a lender will move forward. This is a conversation to have early with both your lender and your broker.