Clients typically overestimate the protection that reliance letters give them. Last month, we described some of the problems with reliance letters, especially for Phase I ESAs. Here are some others:
- Phase I ESAs usually expire in six months; most clients expect to have some reliance longer than that, especially if they are buying property on the faith of the ESA.
Clients won’t necessarily want to use the same engineering company should they need to commission a Phase II ESA, whether now or later. If they use the same consultant, the consultant may have a conflict of interest.. If they usea different consultant, the subsequent consultant will typically insist on repeating the Phase I, unless the client warrants the accuracy and completeness of the original Phase I ESA. Few reliance letters will allow the client to safely give such warranty.
- Much of the evidence that is evaluated in a Phase I ESA comes from the consultant’s client, e.g., the vendor. If the vendor’s information is inaccurate, incomplete or positively misleading, this is not the consultant’s responsibility.
For all these reasons, clients must be warned not to put too much faith in a reliance letter.