Contaminated land

Contamination is an issue of increasing significance to property and corporate practitioners.

The regime contained in part IIA of the Environmental Protection Act 1990 gave local authorities a 15-month planning period during which to develop policies for dealing with contaminated land and this period expired at the end of June.In the middle of June, the Law Society issued warning cards on the subject to all practising solicitors who are registered as practising residential/commercial property as their main areas of practice.

Solicitors are strongly advised to read the Law Society's 'Environmental Law Handbook 4th Edition 2001'.

Further copies of the card can be found on the Law Society's Web site under 'conveyancing' and 'environment'.Warning - contaminated land liabilitiesThe advice contained on this card is not intended to be a professional requirement for solicitors.

Solicitors should be aware of the requirements of part IIA of the Environmental Protection Act 1990 but they themselves cannot provide their clients with conclusive answers.

They must exercise their professional judgement to determine the applicability of this advice to each matter in which they are involved and, where necessary, they should suggest to the client obtaining specialist advice.

In the view of the Law Society, the advice contained in this card conforms to current best practice.Solicitors should be aware that environmental liabilities may arise and consider what further enquiries and specialist assistance the client should be advised to obtain.l The contaminated land regime was brought into effect in England on 1 April 2000.

It applies to all land, whether residential, commercial, industrial or agricultural.

It can affect owners, occupiers, developers, and lenders.

The legislation, which is contained in part IIA, Environmental Protection Act 1990 and in regulations and statutory guidance issued under it (see Contaminated Land (England) Regulations 2000 SI 2000/227 and DETR Guidance on Contaminated Land April 2000) is retrospective.

It covers existing and future contamination.The National Assembly is expected shortly to introduce similar regulations regarding contaminated land in Wales.

l Local authorities must inspect and identify seriously contaminated sites.

They can issue remediation notices requiring action to remediate contamination, in the absence of a voluntary agreement to do so.

In certain cases ('special sites') responsibility for enforcement lies with the Environment Agency.A negative reply to the standard local authority enquiries from the local authority may merely mean the site has not been inspected.

It does not necessarily mean there is no problem.Compliance can be costly, and may result in expenditure which could exceed the value of the property.Liability falls primarily on those who 'cause or knowingly permit' contamination (a class A person).

If the authority cannot identify a class A person, liability falls on a class B person, the current owner, or occupier of the land.

Class B persons include lenders in possession.

There are complex exclusion provisions for transferring liability from one party to another.

Some exclusions apply only on the transfer of land, or the grant of a lease.

The applicability of any relevant exclusion needs to be considered before entering such transactions.

In every transaction you must consider whether contamination is an issue.Conveyancing transactionsIn purchases, mortgages and leases, solicitors should:l Advise the client of potential liabilities associated with contaminated land.

Generally clients should be advised of the possibility and consequences of acquiring interests in contaminated land and the steps that can be taken to assess the risks;l Make specific enquiries of the seller.

In all commercial cases, and if contamination is considered likely to be a risk in residential cases, (for example, redevelopment of brown field land);l Make enquiries of statutory and regulatory bodies;l Undertake independent site for example, obtaining site report from a commercial company.In commercial cases, if there is a likelihood that the site is contaminated:l Advise independent full site investigation;l Consider use of contractual protections and the use of exclusion tests.This may involve specific disclosure of known defects, possibly coupled with price reduction, requirements on seller to remedy before completion, and in complex cases the use of warranties and indemnities.Unresolved problems, consider:l Advising withdrawal, and noting advice;l Advising insurance (increasingly obtainable for costs of remediation of undetected contamination and any shortfall in value because of undisclosed problems).Specific transactionsLeases Consider if usual repair and statutory compliance clauses transfer remediation liability to tenant, and advise.Mortgages Advise lender, if enquiries reveal potential for or existence of contamination, and seek instructions.In enforcement cases, consider appointment of receivers, rather than steps resulting in lender becoming mortgagee in possession, and so treated as a class B person.Share sales and asset purchasesConsider recommending the obtaining of specialist technical advice on potential liabilities, use of detailed enquiries, warranties and indemnities.Other relevant legislationOther legislation and common law liabilities may also be relevant when advising on environmental matters including: Water Resources Act 1991, Groundwater Regulations 1998, Pollution Prevention and Control (England and Wales) Regulations 2000.

For information, see the 'Environmental Law Handbook 4th Edition 2001' and www.detr.gov.uk