Could you Be Contaminated?
Contaminated land poses a hidden danger in many transactions.
Whether you are the purchaser of land, the seller, a landlord, a tenant, a developer or a lender, there are obligations and issues that should be addressed in the event the land in question may be contaminated.
Soil, water or groundwater contamination is often overlooked with guesswork or optimism influencing final terms of purchase. In reality, what is required is an acute and detailed analysis of the affected land and a costing/budget. It may be possible to mitigate the potential legal risks associated with ongoing contamination liability by incorporating special conditions into a contract of sale.
What is Contaminated Land?
Contamination arises as a by-product of historical industrial use. Industrial use includes:
- Manufacturing: any site that has a history of using substances such as petrol, oils, solvents or degreasers;
- Industrial sites: drycleaners, timber preservation, gasworks or tanneries;
- Waste product burial sites; or
- Agricultural land: agricultural chemical use, for example pesticides or weedicides.
An assessment of soil, water and groundwater is required in order to get a full understanding of the extent of contamination and consequent risks to the transaction. This is often a requirement of the relevant council body on submission of a proposal to a change of land use or development. The assessment will determine the presence of metals or other substances in the land, water or groundwater and to what degree those substances present risks to human health or create any detriment to the use of the land.
Different land uses will attract different criteria and not all readings will result in a health risk or detriment. In the event that the assessment indicates contamination, parties to a transaction must consider what is required to manage or remove contamination and who will liable. It is also important for parties to have regard to Cultural Heritage, or Native Title and Traditional Owners rights.
Where do you stand?
Vendor: More often than not, the liability for contamination is passed on to the buyer. Without reports or testing, how do you know that part of the property was not used as a commercial laundry 50 years ago thereby contaminating the land. Should the buyer be indemnified. If so, by whom?
Lender: how do you know if you are lending against a secured property with no contamination? You could become liable as mortgagee in possession in some cases.
Landlord: If you are a landlord for example of a petrol station, careful drafting of the Lease is needed to ensure that the tenant cleans up, removes tanks and the landlord is not liable.
Developer: Developers need to be aware of audit requirements in planning permits and clean up/authority requirements.
Several pieces of legislation and policy work together to guide the requirements and processes applicable to land in Victoria. It is vital that careful thought is applied, and legal advice and review sought, before entering into any transaction where you suspect the land may be contaminated. Tisher Liner FC Law acts for a variety of matters associated with contamination, clean up, EPA notices and the like.
For more information or any further questions, please contact Michael Fetter, Jonathan Tisher or Ron Cohen of this office.
