How Will Contaminated Land Issues Affect My Property Purchase?
Posted on 13th May 2020
As part of the conveyancing process, the property searches are carried out to provide valuable information about your proposed purchase. See our blog, in which our Preston solicitors discuss the importance of such searches, and what they entail, here.
One search in particular, known as the environmental search, provides extensive information about the environment in which the property is situated, including that relating to contaminated land. See the GOV.uk advice on contaminated land, and what it may mean for you.
Land contamination can result in harmful gases, such as methane, being released, which can move through soil, rock and the services that connect to the property. But, where does the contamination stem from? Land contamination can arise for a number of reasons, however, the most common reasons, that our Preston solicitors come across, are from previous industrial works on the land and landfill sites.
Landfill sites are a current concern for many environmentalists, particularly those that are located on the coast. Those near the coast are increasingly becoming subject to environmental forces such as coastal erosion and flooding, which, as global warming affects become more apparent, are only set to increase the spread of contaminants which lay therein.
Data suggests that there are circa 1,264 historical landfill sites cross England and Wales, that fall within the Environment Agency’s Tidal Flood Zone. With the spread of contaminants being set to rise, the worry of environmentalists is that the results may be catastrophic, not only in terms of public health and safety, but also on the environment.
Landfill sites are often abandoned, and fall into states of disuse and disrepair. This does, however, make them an attractive bid for investors, at rock bottom prices. Our Preston solicitors have seen more and more properties that have been built over such sites. This brings about the need for careful consideration in terms of your property purchase, not only in terms of your health, but the potential involvement of any required remedial works.
Liability to remediate can arise as a result of the substances in the land, which pose a risk of harm to people or other receptors, such as ecological areas, controlled waters, crops, animals or buildings, that are to be rectified.
Liability falls, primarily, on those who “cause or knowingly permit” a contaminant to be in, on or under the land. Such a person is known as a 'class A' person. If, however, a class A person cannot be found, the current owner or occupier may be served with a remediation notice, requiring them to remediate the land. In this case, the current owner or occupier is known as a 'class B' person. This would be where such liability may be placed upon you, as the new owner of the property. It is, therefore, imperative that any risk of land contamination is revealed prior to Completion in order that the necessary action can be taken.
As you can see, the risk lies not only in respect of the actual contaminant within the land, but also in the event that remedial works are required, which can be very costly.
So, what does this mean for your conveyance, and what steps should be taken? Our Preston solicitors advise the following:
- Planning/Construction: Particularly when purchasing new build properties, it would be advisable to check whether the issue of land contamination has been dealt with upon construction. This would be evident in the planning permission pertaining to the erection of the property. In order to deal with the issue of land contamination, the local authority often impose certain conditions, that grant the permission, on the proviso that the conditions are fulfilled. Your conveyancing solicitor would be looking to the local authority’s planning portal in this regard, as well as the documentation supplied as part of the Contract pack. (See our blog on the Contract pack and what it entails, here.) Ideally, we would expect to see documentary evidence confirming that a planning condition was imposed in order to deal with land contamination and, furthermore, that the issue has now been dealt with. This would be evidenced by way of a discharge of conditions document, confirming that the condition imposed had been fulfilled and, as a result, discharged. This is also important to ensure that any outstanding planning obligations, that have not been complied with, will not go on to affect you adversely upon Completion, as the new owner of the property. See our Preston solicitors’ blog on the importance of planning permission, here.
- Enquiries of your Conveyancing Solicitor: As we have discussed in previous blogs, the enquiries raised by your property conveyancing solicitor are extremely important, as they can provide vital information about the property you are purchasing. When raising enquiries in respect of contaminated land issues, our Preston solicitors would be requiring clarity on whether the seller has experienced any problems in this regard, whether the seller has been required to contribute to the cost of any clean up activity connected with land contamination and whether there are any known preventative measures in place, to protect against land contamination, as a handful of examples. The enquiries raised by your conveyancer are assessed on a case by case basis, therefore, we would be looking at the level of risk revealed and what information we already hold on the matter. These factors would then assist in deciding what enquiries to raise that will be most beneficial.
- Indemnity Insurance: Where a risk has been revealed, indemnity insurance may be an option. Incepting such policies can be used for a range of different issues, to provide cover in the event that a certain eventuality occurs. See our blog on indemnity insurance, and why it may be helpful to you, here. When discussing contaminated land, indemnity insurance can be put in place to cover against enforcement action in connection with a remediation notice being served, reductions in market value as a result and related legal costs, as examples. The costs of contaminated land clean ups can be extremely costly and, as such, this often makes indemnity insurance an attractive option for property purchasers. Indemnity insurance is not, however, suitable for all and should be discussed with your conveyancing solicitor to ensure you fully understand what is and, importantly, what is not to be covered.
- Report to your Mortgage Lender: Where the conveyancing process reveals certain risks about a property, with your consent, your conveyancing solicitor is required to disclose this to the mortgage lender for their consideration. Requirements can differ, lender to lender, and so our team would be looking to the specific advice given by your lender on the matter. This can all be found via the Council of Mortgage Lender’s Handbook. Such issues should be disclosed, in order that the lender is aware of any matters that may pose adversity to their security over the property. Having considered such issues, the lender then makes a decision as to whether they remain agreeable to offering the loan, and whether they wish to impose any conditions to the offer, that may assist in such circumstances. The lender may require that indemnity insurance be taken out, as an example, however, your conveyancing solicitor will be able to clarify this to you, upon reporting.
So, if you are purchasing a property and have concerns as to land contamination, do not be alarmed. Our team of solicitors in Preston can walk you through the process, and discus the options available to you. Get in touch with us today, for friendly and honest advice, at email@example.com.
Alternatively, if you have any other conveyancing query, submit an online enquiry, and our local solicitors will be on hand to assist you.
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