REALWorld Law

Sale and purchase

Environmental liability

Is the buyer of a real estate asset in this country responsible for soil pollution or contamination of the building even if it did not cause the pollution or contamination?

Angola

Angola

Depending on the type of project it may be necessary to obtain an environmental impact assessment study. This document evaluates the environmental feasibility of the project and also the methods for minimizing or neutralizing their effects.

Australia

Australia

The person causing the pollution is primarily responsible for the contamination caused. Where the person causing the pollution is unknown and cannot be located the owner and/or occupier may be required to undertake the remediation works.

Buyers should take careful note of any environmental issues and should seek to apportion liability and/or adjust the purchase price in relation to any risks identified.

Belgium

Belgium

The regulations concerning responsibility for soil pollution vary between the Flemish, Walloon and Brussels Capital regions.

Flemish region

According to the decree on soil remediation in the Flemish region, the following individuals are liable for carrying out clean-up operations:

  1. Anyone carrying out an activity on the polluted soil for which an environmental permit or an environmental notification is required
  2. If no one carries out such an activity, or if the person carrying out such an activity is exempt from soil remediation (see below), the person who uses the polluted land
  3. If no one carries out such an activity and if no one uses the polluted land (or they are exempt from soil remediation (see below)), the owner of the polluted land.

The people listed above under (a) and (b) will not be held liable, however, if they can each prove that they did not cause the soil pollution and that the pollution dates from before the time they started their activities or started using the polluted land.

The owner of the polluted land will not be held liable if he can prove that he did not cause the soil pollution, that the pollution dates from before he became its owner, that, at the time he became owner, he did not know of any pollution and that no activity mentioned in the list of hazardous activities has been carried out on the land since 1 January 1993. (This last condition does not apply if the soil pollution is 'historical', ie dates from before 29 October 1995). In this case the Flemish public waste agency (OVAM) will carry out soil remediation.

In the Flemish region, a distinction is made between the person liable for carrying out soil remediation and the person responsible for paying any associated costs. In some cases the person liable for carrying out soil remediation may be able to reclaim the costs from the person responsible for the pollution.

Walloon region

In the Walloon region, the Soil Decree of 1 March 2018 provides for the following two hypothesis:

  1. the seller is not designated by the public authorities as holder of soil remediation obligations; in this context parties are free to organise their liability in case of discovery of pollution; and
  2. the seller is designated by the public authorities as holder of soil remediation obligations; in this context parties must agree whether the seller remains liable for said obligations or whether said obligations are transferred to the purchaser in which case a notification to the competent public authorities is compulsory.

The Soil Decree of 1 March 2018 also lists some events (in the context of the filing of a building permit, a single permit or an integrated permit for some acts; in case of termination of some environmental activities; in case of soil damage; upon decision of the administration in case of serious indications of soil pollution), triggering compliance with the execution of soil obligations, including the execution of an exploratory soil study and, if necessary, the conducting of a descriptive soil study and further remediation or other measures.

Brussels Capital region

In the Brussels Capital region, the Soil Clean-Up Act of 13 May 2004 imposes the liability for soil remediation on the person who carried out the risk assessment with a view to transferring the real estate or the environmental permit. However, where the pollution has been fully assessed and can be treated accordingly, that person is only held liable for soil remediation in respect of any pollution they have caused themselves.

If those liable for soil remediation have not accepted their responsibilities, the buyer and the Brussels Environmental Agency (IBGE/BIM) can dissolve the transaction.

The owner or user of a building may also be required to comply with other legal regulations, such as health and safety regulations.

The new Soil Clean-Up Act of 5 March 2009, which came into force on 1 January 2010, as updated by the decree dated 23 June 2017 which came into force on 23 July 2017, maintains the liability system described above.

Bosnia-Herzegovina

Bosnia-Herzegovina

The person who caused the damage to the environment is normally held responsible for it.

In addition, under the Law on Obligations, the builder is liable, for a period of ten years from the date of completion, for any defects in construction or in the land upon which a property has been built.

Canada

Canada

The responsibility of property owners for prior contamination is governed by the laws of the province or territory in which the property is situated. Environmental legislation in most jurisdictions cast a wide net of liability on current and previous owners and operators of sites, with various exceptions. Accordingly, previous environmental contamination is an important deal risk to many real estate transactions. Buyers should investigate and take careful note of any environmental issues and should seek to apportion liability and/or adjust the purchase price in relation to any risks identified.

China

China

PRC Environmental laws have generally adopted a ‘polluter pays’ approach to liability. The Administrative Measures for the Soil Environment around Polluted Land (for Trial Implementation) (污染地块土壤环境管理办法(试行)) issued by Ministry of Environmental Protection on December 31, 2016, which will be effective from 1 July 2017, provides that entities or individuals causing soil pollution shall undertake the primary liability for its treatment and restoration.

Where an enterprise that caused contamination has been altered due to merger, acquisition or divestment of a business unit, the succeeding enterprise must take responsibility for the remediation.

In the case of the transfer of the land use right, the transferee or the third party agreed between the transferor and the transferee, shall be responsible for soil pollution or contamination of such land.

In any case, the liable entities or individuals shall take responsibility for the soil pollution treatment and restoration without time limit.

Croatia

Croatia

The law provides general rules stipulating that a new owner assumes all risks relating to the property. This implies liability for soil pollution or contamination of a building even if this was not caused by the buyer.

A buyer must therefore protect himself from potential liability by making a contractual agreement with the seller, where the latter confirms that the soil is not polluted and that the building is free from contamination.

Czech Republic

Czech Republic

The person who originally caused the contamination or pollution of the soil is responsible for the damage. However, the owner may be affected in certain ways as well.

Denmark

Denmark

In general, no. The polluter is normally responsible for the pollution. The polluter is usually liable for 30 years.

France

France

In accordance with the ‘polluter pays’ principle, a landowner cannot be held responsible for historic contamination of the soil/groundwater. The French Supreme Court holds that owning title to a property is not enough to render the owner liable to carry out the remediation required by the environmental authorities (the préfet and the environmental authorities, DREAL or DRIEAT in Ile-de-France). However, if it is established that the landowner has been negligent or that he has not been ‘stranger’ to the process of production of pollution, then it is assumed that he could be considered as liable. Nonetheless, the notion of ‘stranger’ has not been defined by the legislatives.

French regulations do, however, state that environmental liability is transferred in the case of an asset purchase, when the buyer has the status of an 'operator' under the Seveso regulations, i.e when the buyer has a new operating permit to carry out 'classified activities for the protection of the environment' (Installation classée pour la protection de l'environnement or ICPE).

Consequently, where 'classified activities' are carried out on a site, the operator (the entity holding the permit issued by the environmental authorities to carry out the activities) will be held liable for pollution (historical or recent) unless it can prove that it is not responsible for the pollution and the previous operator, which caused the pollution, can be traced.

It is assumed that a third party can take over the obligation to restore a site after it has been polluted, when investing in a site which has these problems. This transfer of the obligation is coupled with the transfer of liability. This means that if the site is not properly restored, then the third party will be liable, but, if that investor becomes insolvent, the initial polluter will be liable again.

The French Environmental Code provides that the seller of a site where a 'classified installation' has been operated must inform a prospective buyer of any related dangers or inconveniences and disclose a list of any chemical or radioactive substances which have been stored on the site.

Germany

Germany

Under German statutory law:

  • the current owner;
  • the current user;
  • the originator and its legal successors; and
  • the former owners in certain circumstances

can all be required to carry out decontamination by order of the relevant authorities (what is known as the principle of efficiency of risk prevention).

However, the party taking the remedial measures can then make a claim against the party who actually caused the problem, unless the possibility of such a claim was expressly excluded in the sale and purchase agreement.

Hong Kong, SAR

Hong Kong, SAR

The person causing the pollution is primarily responsible for its clean-up. But if that person cannot be found or pursued, then environmental legislation allows local authorities to approach the current owners and/or occupiers of the land.

Buyers should therefore take careful note of any environmental issues identified in the survey and should seek to apportion liability for these or adjust the price of the property accordingly.

Hungary

Hungary

Yes. Under Hungarian environmental law, the owner and the occupier (if they are different persons) are both liable for any historical contamination. If the owner can prove beyond doubt that it did not cause the contamination and can identify the polluter, it may be able to escape liability.

Ireland

Ireland

Yes. While the principle of  'polluter pays' generally applies, the Environmental Protection Agency (EPA) will focus its regulatory efforts on whoever is, or appears to be, for the time being in occupation or control of the property.

Italy

Italy

Under Italian law, the buyer is responsible for the necessary remediation and safety work, even if the person who originally caused the contamination and soil pollution is liable to pay damages. The authorities may, at their discretion, require either party to carry out remedial measures.

However, if the owner/occupier is required to do this then they can make a claim against the party that actually caused the contamination, unless this is otherwise agreed in the sale and purchase agreement.

Japan

Japan

Yes.  Under the Soil Contamination Countermeasures Act, a buyer of a property (new property owner) may be held responsible for soil pollution or contamination having occurred in the days of the old property owner.  Therefore, when purchasing real estate, a buyer should pay careful attention to this risk and take any recommended preventative measures.

Netherlands

Netherlands

Under Dutch law, in principle the owner of the title to a real estate asset is responsible for preventing soil pollution and/or contamination and also must implement decontamination measures. Alternatively, should the owner demonstrate that another party is responsible for the pollution, this party may be held liable for remediation costs.

Nigeria

Nigeria

The law requires for an environmental impact assessment to be carried out by professionals and a report issued and filed with the relevant town planning and building control agency of the state. The nature of the building construction or development determines whether the environment assessment report is required (Environmental Impact Assessment Act, 1992 and Nigerian Urban and Regional Planning Act No. 88, 1992). This is to ensure that the potential environmental hazards posed by a proposed building development are identified prior to construction and adequate mitigation actions are put in place.

Generally, the owner, tenants and occupiers of property are directly responsible for the environmental sanitation of their premises and it is not an excuse that the pollution or contamination was caused by another person. The federal and state laws impose liability for causing pollution or contamination and impose liability for non-compliance by owners of buildings.

The buyer or owner of real estate has a responsibility for the environment sanitation of the property but will not be liable for any offence where the pollution or contamination to the property is caused by a third party’s action if the owner is not contributory thereto.

Norway

Norway

This situation is normally governed by the 'polluter pays' principle, though the seller can disclaim responsibility in the contract. However, if any pollution is discovered, the owner of the building may be held responsible by the authorities regardless of any contract which exists. If, according to the contract, responsibility for the pollution rests with the seller, the buyer may then subsequently claim restitution from the seller.

Poland

Poland

Under Polish environmental law, the basic rule is that liability for pollution or contamination can only be imposed on the buyer (owner of the property) if it was his fault (intentional or negligence). Furthermore, under Polish environmental law, the owner of the property on which historical contamination or pollution has occurred, is obliged  to carry out remediation. Nevertheless, if the owner demonstrates that historical pollution was caused by another entity, that entity will be responsible for the remediation of that historical pollution or contamination.

Portugal

Portugal

Yes. The buyer of a property may be deemed responsible for soil pollution or contamination based on strict liability, even if he did not cause the pollution or contamination.

Romania

Romania

This environmental liability is determined on an objective basis and governed by the “polluter pays” principle (which effectively means that the person responsible for the pollution will be liable for damages). If pollution is discovered, in order to avoid liability, the owner of the property must prove that the pollution was generated prior to the transfer of the ownership of the property, by the previous owner or tenant.

Slovak Republic

Slovak Republic

Generally, no. For environmental pollution or contamination, the polluter (a person who has caused the pollution or contamination of the environment) would be responsible.

However, the new owner of a contaminated building may be responsible for its contamination.

Under the Civil Code, if the seller is aware of defects in the real estate (including pollution or contamination of the land or buildings) he is obliged to inform the buyer prior to the conclusion of the sale and purchase contract.

Spain

Spain

Yes. The buyer should identify any potential or actual contamination of the soil resulting from the previous use of the land. The law requires that remedial action is taken in the case of soil pollution. The party responsible for the contamination is normally responsible for carrying this out but the owner or occupier of the property is also liable unless they can prove that the contamination was caused before their acquisition of the property and can ensure that the person responsible carries out the clean-up operation.

Additionally, following the recent entry into force of Law 7/2022 on waste and contaminated land for a circular economy, natural or legal persons owning property are obliged, on the occasion of the transfer of any real right over the same, to declare in the title deed formalising the transfer whether or not any potentially soil-polluting activity has been carried out on the transferred property. Said declaration shall be the subject of a marginal note (nota marginal) in the property registry.

Sweden

Sweden

Yes, under the Environmental Act a buyer may be held responsible for soil pollution or contamination, despite its primary provision that the person who originally caused the contamination and soil pollution is liable for the damages.

Thailand

Thailand

Yes. The National Environment Quality Act provides that an owner, occupant or possessor of a pollution source will be liable for any damage due to such pollution. As a result, the buyer will be responsible for any existing soil pollution or contamination of the land or building after the date of registration of the ownership transfer.

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

Environmental legislation is in its infancy in Abu Dhabi and in the UAE in general. Legislation covering this area is awaited.

United Arab Emirates - Dubai

United Arab Emirates - Dubai

Such environmental laws are in their infancy in this jurisdiction and as such, this is not currently a highly regulated issue.

UK - England and Wales UK - England and Wales

UK - England and Wales

Generally, a person who causes environmental pollution or contamination, or knowingly allows it to continue, is primarily responsible for its clean-up. If that person cannot be found or pursued, then environmental legislation allows local authorities to approach the current owners and/or occupiers of the land.

Buyers should therefore take careful note of any environmental issues identified in the survey and should seek to apportion liability for these or adjust the price of the property accordingly.

UK - Scotland

UK - Scotland

The basic principle in existing environmental legislation is that the ‘polluter’ pays, ie the person causing the pollution is primarily responsible for its clean-up.

If that person cannot be found or pursued, however, then the legislation does allow the local authority to pursue current owners and/or occupiers of a property. Buyers will therefore need to take careful note of any environmental issues identified in the survey.

Ukraine

Ukraine

The Ukrainian Land Code provides for liability in the case of individuals and companies doing anything that contaminates the land with chemical or radioactive agents, or sewage, or pollution by industrial, everyday and other waste. Moreover, the law dealing with the preservation of the natural environment stipulates that companies whose activities have a harmful effect on the environment must equip themselves with any installations and facilities necessary for purifying or sterilising emissions, as well as minimising the effect of harmful agents. Those causing environmental damage are also obliged to provide compensation to those affected if they cannot prove that a natural disaster caused the damage, or that it was caused by intentional activity by the victims.

Although formally the liability should be imposed on the person who caused the environmental damage, in practice the controlling authorities tend to go against the current owner of the real estate, not tracing the history of the ownership of the real estate. Thereafter the buyer of the real estate may file a restitution claim against the person who caused the environmental damage.

United States

United States

The responsibility of property owners for prior contamination is governed both by federal law and by the State law of the property in question. The federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) imposes strict liability on owners and operators of contaminated property, even if they did not cause the contamination. However, ‘innocent’ purchasers who perform prescribed levels of due diligence prior to acquiring the contaminated property (known as ‘All Appropriate Inquiry’) and who take reasonable steps to cooperate with environmental governmental agencies and avoid exacerbating the contamination after the purchase, can avoid CERCLA strict liability.

Liability under state law can vary, with some states imposing strict liability similar to CERCLA and other states imposing liability only against parties who caused or contributed to the contamination.

The primary federal environmental authority, the US Environmental Protection Agency (EPA), has entered into agreements with several states under which EPA allows state agencies to manage the remediation of most contaminated sites in their jurisdictions, with EPA intervening only in certain extraordinary cases (eg sites that present a relatively higher risk to public health or the environment).

Zimbabwe

Zimbabwe

According to the Environment Management Act [Chapter 20.27], the Director General, inspectors and officers are responsible for ensuring that policies and programs in respect of land, air, water and soil pollution and hazardous waste management are coordinated. This Act provides them with many powers including to enter specified land, examine any activity considered to be detrimental to the environment, take or remove samples, or seize items considered to be used in the commission of an offence.

Power is also granted to them to effect closure of a premises for a period of three weeks or serve an order requiring the individual to take preventative measures against the harmful activities against the environment. An investigation is normally conducted, depending on the circumstances of the case in order to ascertain the source of the pollution or contamination of the building. In the event that the buyer is served with an order in this instance where the fault was not his own, the Act makes provision for an appeal process and for the Administration Court to hear the matter and make a decision based on the evidence submitted.