{"ok":true,"canonical_url":"https://dealroom.so/glossary/recognized-environmental-conditions","api_url":"https://dealroom.so/api/public/glossary/recognized-environmental-conditions","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"recognized-environmental-conditions","term":"Recognized Environmental Conditions","aka":"RECs","group":"Reading the business","definition":"The presence or likely presence of hazardous substances or petroleum products on a property. For a buyer, RECs trigger environmental due diligence to assess potential clean-up costs and liabilities.","what_it_means":"An SBA loan requires an Environmental Questionnaire. If that raises red flags, a Phase I Environmental Site Assessment is performed. If the Phase I identifies RECs, a Phase II Environmental Site Assessment may be required to determine the extent of contamination. This directly impacts the property's value and your liability as the new owner.","url":"https://dealroom.so/glossary/recognized-environmental-conditions","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"environmental-questionnaire","term":"Environmental Questionnaire","url":"https://dealroom.so/glossary/environmental-questionnaire"},{"slug":"phase-i-environmental-site-assessment","term":"Phase I Environmental Site Assessment","url":"https://dealroom.so/glossary/phase-i-environmental-site-assessment"},{"slug":"phase-ii-environmental-site-assessment","term":"Phase II Environmental Site Assessment","url":"https://dealroom.so/glossary/phase-ii-environmental-site-assessment"},{"slug":"liability","term":"Liability","url":"https://dealroom.so/glossary/liability"}],"related_questions":[{"question":"What are a lender's responsibilities if a Phase I ESA identifies Recognized Environmental Conditions (RECs)?","url":"https://dealroom.so/for-lenders/questions/what-are-a-lender-s-responsibilities-if-a-phase-i-esa-identifies-recognized-environmental-"},{"question":"What are the lender's responsibilities if a Phase I ESA identifies Recognized Environmental Conditions (RECs)?","url":"https://dealroom.so/for-lenders/questions/what-are-the-lender-s-responsibilities-if-a-phase-i-esa-identifies-recognized-environmenta"},{"question":"If a Phase I Environmental Site Assessment (ESA) identifies Recognized Environmental Conditions (RECs), what are the next steps for a lender?","url":"https://dealroom.so/for-lenders/questions/if-a-phase-i-environmental-site-assessment-esa-identifies-recognized-environmental-conditi"},{"question":"What specific actions must a lender take when a Phase I ESA reveals Recognized Environmental Conditions (RECs)?","url":"https://dealroom.so/for-lenders/questions/what-specific-actions-must-a-lender-take-when-a-phase-i-esa-reveals-recognized-environment"},{"question":"When a Phase I Environmental Site Assessment (ESA) identifies a Recognized Environmental Condition (REC), what are the lender's subsequent responsibilities?","url":"https://dealroom.so/for-lenders/questions/when-a-phase-i-environmental-site-assessment-esa-identifies-a-recognized-environmental-con"},{"question":"What steps should a lender take if a Phase I ESA identifies a Recognized Environmental Condition (REC)?","url":"https://dealroom.so/for-lenders/questions/what-steps-should-a-lender-take-if-a-phase-i-esa-identifies-a-recognized-environmental-con"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Recognized Environmental Conditions","url":"https://dealroom.so/glossary/recognized-environmental-conditions","source_type":"DealRoom Data"}}