Potentially Contaminated Land Due Diligence Checklist : 5 Easy Risk Mitigation Actions You Can Take
Potentially Contaminated Land Due Diligence Checklist
One of the greatest risks in respect to the acquisition of land is the unforeseen risk that it is contaminated. Land may not appear contaminated at the time of purchase for example, but is later discovered leading to potentially major implications in terms of reduced market value, unforeseen costs and delays or exposure to environmental liabilities. Refer to this blog post ‘What is Potentially Contaminated Land and Why Does it Affect My Site?’ for more detail on what potentially contaminated land is and how it might affect you.
The essential thing is to take a precautionary approach and understand the condition of the land at an early stage in the project lifecycle so that you can plan accordingly. As part of that, a cost effective initial step is for a purchaser to undertake their own investigation to consider whether past activities – including the use of adjacent land – may have caused contamination at the site and what implications this may have in regard to future use or re-purposing.
It is also recommended that a purchaser obtains specific planning or legal advice before taking any significant action in regard to property acquisition. If the property due diligence process does indicate contaminated land issues, ideally, a purchaser should have the ability to renegotiate the price of the property or terminate the contract if the outcome of the investigation is not satisfactory.
See below for five initial actions a potential purchaser can take to help mitigate the risk of potentially contaminated land:
- Inspect the site – look for evidence of contamination or current and historical activities that may give rise to contamination (for example, remains of vent pipes connected to an old fuel tank, staining, odours, excavated areas, soil stockpiles, septic or sullage systems and the old dilapidated shed that contains asbestos containing materials (ACM) etc). Also consider any potential contamination from surrounding land uses (for example, an adjacent service station) as pollution can migrate via the vapour phase or if it gets into groundwater.
- Review planning schemes & overlays – review any site analysis presented in accordance with Clauses 54.01-1 (single dwellings) & 55.01-1 (two or more dwellings) of Planning Schemes Online (these clauses require issues of site contamination to be identified). Identify whether an EAO (or other relevant DPO) exists over the site via the VicPlan website.
- Make enquiries with the relevant responsible authority
– Current and previous zoning, ownership or activities carried out on the site. Council rate records are a useful record of this information.
– Any previous investigations or site assessments conducted. - Search publicly available records – for example:
– The Victoria Unearthed website helps you find out more about land, groundwater and potential contamination. It brings together information from multiple sources that include environmental audits and environmental audit overlays, landfill registers and business directories or listings. - Information from the vendor – Under the duty to manage introduced under the new Environment Protection Act, 2017, vendors are legally required to make any potentially contaminated land site condition information available to prospective purchasers. Failure to disclose this information is an offence.
Environmental liability can be costly. If you still have concerns, we recommend you hire an environmental consultant experienced in conducting an environmental site assessment (ESA), before entering into a purchase agreement on potentially contaminated land. Reputable environmental consultants add value. They play an important advisory role in mitigating risk. Nine out of ten times, potentially contaminated land is not an issue or represents a low-level risk that can be managed for an acceptable cost; however, a consultant’s real value is helping clients avoid losses associated with unforeseen significant risk(s).
Next Steps
Industries with high potential for contaminated land include dry-cleaning, breweries and distilleries, fuel storage, electrical manufacturing, textiles and spray-painting. For a full list of potentially contaminating activities and what the associated contaminants of concern are, download our free guide ‘What Every Property Developer Needs to Know About Potentially Contaminated Land: the complete handbook.’
In here you will learn more about:
- What potentially contaminated land is and the associated risks to your business;
- What steps you need to take to mitigate potential risk and the entities you need to work with; and
- What the implications are from a cost and management perspective.
– Review certificates and statements of environmental audit available on the Register of Environmental Audits on the EPA website
– Review the EPA Priority Sites Register for information about sites with a current EPA Direction, Notice or Order (for example, improvement notice or remedial notice).
