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.

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 activity on 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. If 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.

Disclaimer: If you think a similar situation may apply to you, then you should contact us for detailed legal advice relating to the particular facts and circumstances of your property or lease agreement. This article is not intended to provide such detailed and specific advice. And, you should not act on the basis of any matter contained in this article without first obtaining more comprehensive professional advice.