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How could you avoid last minute stalling of land deals due to ground contamination issues?

Matthew Brennan of Peak Associates recently commented on the issue of contamination which was causing land deals to fall through.

Matthew stated: “We are frequently asked to assist with the due diligence process associated with acquisition of property. With respect to the assessment of contamination in the ground and the associated potential liability, we often find it has been left to the end of the process and we are asked to undertake assessments with little time available”.

“Our desk top studies and walkover survey (Phase 1 Audit) may have found nothing of particular concern and the deal goes through. However, on several occasions recently, we have discovered something not expected, for example: a former underground fuel tank beneath two busy retail premises, spanning the boundary between the two”.

He added: “With investors being risk adverse, the problem becomes one of how to assess the risks in a very short space of time, and quantify the likely cost of remedial works”.

“This typically requires a Phase 2 Investigation (intrusive ground investigation) in order to establish the degree of contamination and whether it is presenting a risk to the users of the site, or off site receptors (neighbouring property users, surface water courses, groundwater abstractions). Once the ground investigation is complete, we can look at the likely costs of the remedial works considered necessary”.

“Unfortunately, there can be insufficient time to undertake the Phase 2 survey, and sometimes access cannot be agreed with a tenant within the time scales available, and the deal falls through at the last minute”.

“If the Phase 1 Environmental Assessment is undertaken sooner, there is more time to properly assess the risks, including completing the Phase 2 investigation process”.

Matthew added: “Whilst it is possible to undertake Phase 1 and Phase 2 investigations at short notice, and obtain soil samples beneath floor slabs inside premises at very awkward locations, the laboratory testing still takes time and even with a premium for speeding the testing up, some test can still take 5 working days.
We have been able to complete investigations and issue reports within two to three weeks, but if a significant problem is identified, time for further assessment can be required”.

“So, we would advise that consideration of potential ground contamination issues is undertaken early on in the process in order to avoid stalling the deal at the last hurdle”.

.For help on ground contamination matters, you can contact Matthew Brennan at Peak Associates on 01925 491011 or via