Contaminated Residential Properties

more+
less-

You may assume that contamination is not an issue when you buy a residential property.  However, in some circumstances, the property you are buying may be contaminated, leading to a costly clean-up or a decline in your property value.

There are a number of ways that contamination may arise on a residential property.  The source of the contamination may originate from the residential property itself.  If the residential property was used for agricultural purposes, for example, there may be fuel, fertilizers, and pesticides in the soil or groundwater.  Other potential sources of contamination are lead paint, imported fill, and coal ash.  Homeowners themselves, in the past, have been known to bury various wastes, fuels, and chemicals in their yards as that was once viewed to be a “safe” form of disposal.  In addition, heating methods in the past commonly used underground storage tanks that were prone to leaks and their location may not have been well marked.  As a result, you may have no idea that you are buying a property with a leaking tank underground.

The source of the contamination may also originate away from the property itself.  Old landfills, metal strippers, gas stations, and dry cleaners are often associated with groundwater pollution.  The polluted groundwater can travel a great distance, finding its way to the groundwater below your property and into the soil.  Once the contamination is discovered, it can then be difficult and costly to prove the source of the contamination. 

Even if the source of the contamination can be determined, the chances of recovering the costs of the clean-up or the decline in value on your property are likely slim.  The owner of the property that created the contamination may be deceased, bankrupt, impossible to locate, or may have disappeared long before you purchased the property.  You may also have to prove that at the time the contamination occurred, the property owner should have known that what he was doing could harm your property.  Unfortunately, the effects of many chemicals and pollutants have only become known recently and wouldn’t have been known to property owners in the past.

When buying a resale residential property, the rule is buyer beware.  The seller may not have an obligation to inform you about potential environmental concerns about the property if you don’t ask.  As a potential buyer, it may be wise to consider whether an environmental investigation is necessary before closing the deal; for example, consider whether any neighbouring properties are common sources of contamination listed above.  Investigating up front could save you the clean-up costs later on.

 

Topics:  Buyers, Contaminated Properties, Environmental Liability, Sellers

Published In: Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Lerners LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »