Site Contamination, a Primer
CATEGORY: Practice Tips
TAGS: Environmental Issues Environmental Management Act Property Disclosure Statement Site Contamination Soil Contamination
When listing or selling a property, REALTORS® need a basic understanding of site contamination and its potential impact on property transactions. This can include identifying potential sources of contamination, understanding the implications of contamination on property value and potential liabilities, and providing essential advice to clients on how to address and mitigate contamination risks.
What is site contamination?
Site contamination refers to the presence of harmful substances, such as chemicals, pollutants, or other hazardous materials, in soil, sediment, groundwater, or air on a property. Site contamination can result from various site uses such as manufacturing, oil and gas activities, or waste disposal in the neighbouring areas of a property or the site itself. Site contamination can have profound implications for humans and the environment.
Although contamination is often not immediately apparent, it can pose a significant risk to those who live or work in the vicinity of the property and can have significant economic and legal implications for buyers and sellers. Buyers might hesitate to acquire a contaminated property or demand substantial remedial action before purchasing. On the other hand, sellers may be obligated to reveal any contamination on their property, which can restrict the pool of potential buyers and impact the property's value.
Identifying contaminated sites
It is important for REALTORS® to take steps to identify potential site contamination early in the transaction to help protect their clients from legal and financial liabilities. Some measures REALTORS® can take are:
Ask People Knowledgeable About the Site
REALTORS® should ask questions to the property owner, neighbours, and other people familiar with the site to determine if any history of activities may have caused contamination. Such activities may include underground storage tanks, dry-cleaning or industrial activities.
Search the Site Registry
Researching and digging into the records and searching the Environmental Management Act site registry can uncover information on known or suspected contaminated sites in the area to determine if the site is listed and if any environmental investigations have been conducted.
Advise Clients on Due Diligence
REALTORS® can recommend their clients undertake due diligence on properties that may be contaminated. This can be as a condition of sale, and for example, may include a Phase I Environmental Site Assessment, which comprises reviewing available records, site inspections, and interviews with site owners and operators.
When are site disclosure statements required, and what are the exceptions?
A Site Disclosure Statement is required for sellers when there are records of Schedule 2 industrial or commercial use on the property. This includes manufacturing, processing, storage, and transportation of hazardous materials, among other activities that may contaminate the site.
Site disclosure statements are triggered by various events, such as property sales, municipal applications, decommissioning or ceasing operations, and insolvency proceedings. Some exceptions may apply and are listed in Division 3, Section 4 of the Contaminated Sites Regulation, to name a few:
- If the site is the subject of an approval in principle or certificate of compliance relevant to the current or proposed use of the site and no further contamination occurred after the approval or certificate was issued.
- If a determination was made that the site is not contaminated, and no contamination occurred after the fact.
- If the person is an applicant for subdivision under Section 114 of the Land Title Act or the proposed subdivision consists only of adjusting the boundary or consolidating two or more parcels into a single parcel.
- If the land is used for a specified industrial or commercial use that would continue to be authorized on the land if the zoning were approved or the development permit or building permit is for certain purposes such as demolition, installing or replacing utilities, fencing, signage, paving, or landscaping.
- If the land is an operating area under the Oil and Gas Activities Act.
If the seller is unable to provide a site disclosure statement, the buyer should obtain appropriate professional advice and independent legal advice as they may have the right to cancel the contract.
The British Columbia Ministry of Environment and Climate Change Strategy provides many resources to identify and deal with contaminated sites:
- Site remediation hub and resources
- Contaminated site identification and exemptions for site disclosure statements
- Regulations and requirements to investigate sites
- Site remediation webinars
By asking questions, searching site registries, and recommending due diligence be undertaken with regards to potentially contaminated properties, REALTORS® can help their clients make informed decisions and avoid potential legal and financial issues in the future.
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