Contamination risks can present real hazards that demand potentially expensive remediation and may have a severely detrimental effect on a site’s value. Building surveyors need, therefore, to be aware of the basic issues and know when to call in specialist input from an environmental consultant.
Most surveyors will be familiar with Phase I Environmental Assessments which are needed when a site is going through the planning process or as part of transaction due diligence. A Phase 1 Assessment brings together information from several sources and may also involve a site inspection. Once gathered, the environmental consultant: carries out a systematic evaluation of contamination levels; highlights the significance of the associated risks; and proposes remedial solutions. Other potential environmental liabilities that may need further investigation may also be identified.
Surveyors should be aware that the risk ranking refers to contamination risk only. As such it should not be reported in isolation.
Phase I assessments only give a very basic indication of whether there’s likely to be a flood riskproblem. Flood maps published by The Environment Agency, SEPA and Natural Resources Wales can be used to make an initial cursory check but the default assumption surveyors should make is that flood risk may be an issue on any site. Any flood risk identified should be flagged up as soon as possible as specialist reports and information requests from regulatory authorities can take several weeks to obtain.
Waterlogging, evidence of water ingress in basements and damp floor joists noted upon inspection all indicate possible groundwater flooding.
Dilapidations and environmental issues
Even if contamination is present on site it is highly unlikely that a statutory breach will exist. The precise wording of a lease is key: many leases, particularly older ones, are silent or ambiguous as regards contamination liability.
It is also often difficult to establish exactly when, where and how contamination has occurred, particularly on industrial sites. This uncertainty could be avoided by benchmarking the condition of the site at lease entry – similar to a Schedule of Condition.
Non-compliance with environmental regulations would amount to a breach of covenant but this usually needs to be picked up whilst the tenant is in occupation. Conducting audits at regular intervals during the lease is a possible approach.
Standard ‘Jervis v Harris’ clauses allowing the landlord the right to re-enter a property in order to carry out repairs are unlikely to give landlords the right to conduct intrusive investigations whilst a property is let. However, there is no reason why environmental inspections cannot be carried out in the same way as other inspections.
Other types of ‘contamination’
Asbestos and Japanese Knotweed are examples of other types of “contamination” that can result in significant financial liabilities if they are not managed or controlled properly. Mould is also a growing concern – and one not covered by a standard Phase 1 report. All should be readily apparent during a building survey inspection.
When is advice from an environmental consultant required?
Because of the potential for significant financial consequences building surveyors should flag up the need for specialist environmental input whenever they encounter something they know to be of concern, or anything else they are unsure about.
The above article was published in the Journal of Building Survey, Appraisal and Valuation Volume 6 Number 4.