The Importance of Environmental and Contamination Due Diligence when Purchasing a Property
When looking at the importance of environmental and contamination due diligence when purchasing a property, you should be looking at due diligence of contamination effect on the environment.
Environmental Due Diligence is undertaken to examine potential dangers associated with a property or land holding as a result of soil or groundwater contamination and their broader potential impacts.
Increasingly rigorous legislation has seen environmental liability become a significant consideration in the overall due diligence conducted around property and corporate businesses. There have been a number of instances when unexpected environmental conditions result in significant financial costs, time delays, reputational damage, and in the most extreme cases even criminal proceedings.
So, how do we avoid these situations? Initially a Phase 1 Site Investigation should be conducted, or alternatively known as a Desk Study.
A Phase 1 Site Investigation or Desk Study is a preliminary risk assessment of the study area based upon the findings and evaluation of published and third-party data from multiple sources relating to the site’s environmental, geological and historical setting. A Phase 1 Site Investigation may be necessary because there may be a clause in a planning condition to undertake a contaminated land assessment as part of the planning process. Alternatively, in some situations a Desk Study can be undertaken as part of the due diligence process to identify and appraise the potential risk associated with the site or property and therefore the liabilities the prospective buyer will acquire.
Essentially the desk-based review evaluates all the relevant information to inform potential risks at the site from potentially contaminated land.
One of the, or if not, the most important element of your Phase 1 report will be the conceptual site model or (CSM) which identifies any potential sources, pathways or receptors of contamination. The CSM is used to inform the Preliminary Risk Assessment which defines the potential risks present on your site identified during the desk review of site inspection.
During the course of the desk study and site walkover, there may be some key features identified on the site and surrounding area that can be classified as being a contamination source, pathway or receptor and by presenting each of these the hazards and risks can be assessed and discussed.
If the Phase 1 investigation highlights any potential hazards and risks, further investigation will be required in the form of a Phase 2 (intrusive) Site Investigation. Following the Phase 1 investigation the Phase 2 Intrusive Site Investigation should be designed based upon the findings of the Phase 1 study to prove whether any contamination sources, pathways and receptors exist.
You will know from the outcome of the Phase 1, if the site has any potential issues related to soil and groundwater contamination as well as potential ground gas or vapour risks. A Phase 1 investigation provides an understanding of the former site usage and the typical associated contamination with any former uses, in particular industrial processes giving a Phase 2 investigation a fighting chance of identifying any contamination risks present on site.
The investigations would call for collection of soil, groundwater (and possibly surface water), vapour or ground gas monitoring to confirm sources of contamination but also confirm if any potential contamination are present.
Following a Phase 2 site investigation a Detailed Quantitative Risk Assessment (DQRA) assesses the contamination sources, pathways and receptors and calculates if any contamination encountered presents a risk to the sites end users, construction and maintenance workers or the surrounding environment. The DQRA is undertaken using data analysis, computer modelling and statistical analysis of the data obtained during the site investigation and subsequent laboratory analysis.
So why do we do it? We do it to protect you, the buyer or the owner. Ultimately the due diligence of contamination effect on the environment when buying a property limits the mitigation of risk for its financial owner.