Contaminated Land: Is it Buyer Beware?

All Australian states and territories have (somewhat varied) legislation dealing with land contamination.

There are some important concepts applicable to every state and territory.

Many actions may be contrary to environmental protection laws, but sites classified as contaminated have to meet specific criteria.where to buy

This means that mere pollution does not necessarily equate to land contamination.

Basically, land contamination means that there are chemical substances or waste present in soil or groundwater at above acceptable background levels, potentially leading to adverse health or environmental outcomes.

Usually, contamination is the result of historic human activityon or adjacent to the land.

While in the past, high risk activities were mostly unregulated, permits or extensive monitoring are now required for operating premises such as a petrol station or for storing chemicals.

Full disclosure is vital

Sites that are contaminated appear on registers operated by the state or territorial regulators.

pen writing silent auction handIf your site does not appear on the register but you suspect possible contamination exists, it is imperative that you notify the relevant authority.

There are great consequences including financial penalties for those who don’t notify authorities within the required time frame.

When selling contaminated land, disclosure is required in all states and territories.

Sellers who do not disclose such information may be liable under environmental laws as well as for misleading and deceptive conduct.

An additional problem for developers can occur when wanting to rezone land from one use, such as industrial, to another, such as residential.

While land may have been at acceptable levels of contamination for certain uses, rezoning land can crystallise the risk and therefore the need for remediation.

Who is responsible?

Most jurisdictions observe a ‘polluter-pays’ principle when it comes to attributing responsibility for contamination and its clean-up.

If the polluter cannot be found however, a hierarchical approach is used in most jurisdictions to determine who should next be apportioned responsibility.

The next most obvious party is an owner or occupier liable for contamination if they knew, or ought to have known that contamination existed or would exist.

Other parties that may be considered responsible include former owners or occupiers, mortgagees in possession and local councils.

Some jurisdictions also allow a party to contract out of liability.

Bottom Line: Market forces play a part in adjusting the value of land requiring time and expense to ‘clean up’.

This may mean that contaminated land has a lower asking price than similar, uncontaminated lots.

To find out what land is on your state’s or territory’s register, access is available online through all environmental protection authority websites.

Want more of this type of information?


Chris is a respected Valuer, Real Estate Agent and Auctioneer. Since the mid-1970s, he has been a regular keynote speaker at a wide range of business conferences and seminars around Australia. Many high net-worth clients seek his guidance in acquiring Commercial property. Visit: Commercial Property Made Easy

'Contaminated Land: Is it Buyer Beware?' have 1 comment

  1. May 6, 2015 @ 10:45 am Ivan Devcic

    I work in the area of contamination assessment, remediation and litigation and have 25 years experience in this field. Contamination compliance and risk assessment is a very specialised field both technically and legally and despite the legal and moral arguments regarding the concept of “polluter pays” it very rarely plays out that way.

    Where a contamination issue has been brought the the attention of EPA or council (e.g. rezoning of an old industrial site to residential) the onus falls on the site occupier/owner to clean up the site as well as (if possible) pursue the polluter to assist in the clean up or seek a damages claim via the legal system. This legal process can often take years and cost many 10s or 100s of thousands of dollars.

    It is also worth noting that whilst a register of contaminated sites exists in many states, this register covers a very small number of properties as most properties have never been assessed for contamination.

    Regarding full disclosure, it is totally optional for the vendor to assess any site before selling and in most cases Sale Documentation (e.g Section 32) will not include a contamination assessment report as there is no legal requirement for the vendor to include one.

    In summary to protect yourself from significant delays, costly site clean-ups and substantive legals fees pursuing the original polluter of the site, timely advice from a contaminated land expert should be an integral part of any property acquisition due diligence process.


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