Assessing land contamination risk in a commercial property transaction
Contamination risk in commercial property transactions is regulated by state legislation — in NSW under the Contaminated Land Management Act 1997, in VIC under the Environment Protection Act 2017. Purchasers need to assess current contamination, historical use, and notification obligations before exchange.
This is an 8-step workflow for assessing and allocating land contamination risk in a commercial property transaction under the applicable state Contaminated Land Management Act.
Before you start
- Title search and dealings history
- Historical aerial photographs and certificates of title going back 40+ years
- Existing environmental reports for the site
- State EPA contaminated land register search
The workflow
Review state EPA contaminated land register
Search the state EPA register for any declarations, notices, or orders affecting the site. In NSW this is the CLM Act register; in VIC it is the EPA Priority Sites Register.
Assess historical land use
Review historical aerial photographs, certificates of title, and local council records for evidence of potentially contaminating activities (fuel storage, dry cleaning, manufacturing, landfill).
Review existing environmental reports
Obtain any existing Phase I Environmental Site Assessment, Phase II investigation, or remediation reports. Assess their currency and scope.
Commission a Phase I ESA
If no current Phase I exists, commission one from a qualified environmental consultant. Phase I is desktop and visual; Phase II involves sampling.
Assess notification obligations
Under the CLM Act (NSW) s 60, owners and occupiers must notify the EPA of significant contamination. Confirm whether the vendor has met or breached this.
Negotiate contract protections
Build protections into the contract of sale — environmental warranties, indemnities for pre-existing contamination, retention/escrow, and rights to terminate on adverse Phase II findings.
Address planning and site auditor regime
If the proposed use is sensitive (residential, childcare, open space), a site audit statement from an accredited site auditor may be required under planning legislation.
Document the risk allocation and completion
Document the final risk allocation in special conditions. On completion, lodge notifications with the EPA where required and update insurance.
What you will have at the end
A property acquisition with contamination risk properly assessed, allocated through contract, and documented for future disposal or development.
Common issues
- Relying on a Phase I older than three years without refresh
- No indemnity carve-out for contamination discovered within a set limitation period
- Missing EPA notification for discovered significant contamination
- Assuming site auditor sign-off on a prior use satisfies the proposed new use
- Inadequate retention/escrow for remediation costs that emerge post-completion
Run this workflow on a real matter
Quillio drafts contamination risk allocation clauses calibrated to state CLM regimes and flags notification obligations from existing ESA reports. See /practice-areas/property-lawyers.
This workflow is a general guide. Contamination regimes are state-specific — adapt to the jurisdiction of the site and involve accredited environmental consultants early.
Try this workflow with Quillio.
Quillio can run this workflow on a real matter, with citations to current AU authority on every step. The free trial requires no credit card.
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