Pre-Purchase and Pre-Sale Due Diligence Assessments

When it comes to purchasing a property, many people are familiar with the concept of council searches and building and pest inspections. However, when shopping within older suburbs, particularly those with a history of commercial or industrial activities, a pre-purchase contamination assessment may be just as critical.

At a time when the major banks’ lending criteria are under intense scrutiny, we see an increase in requests for pre-purchase contamination assessments, particularly in rural, semi-rural, commercial and industrial land. However, the banks do not always require an assessment. If not conducting an assessment prior to the signing of the contracts (or having the contract subject to the completion of an assessment with satisfying findings), buyers leave themselves open to the risk of acquiring contaminated land, which may severely limit the development potential, or worse, maybe a significant liability if any contamination present is affecting adjacent sites.

Flipping the coin, when selling a commercial, industrial or rural site, conducting a pre-sale contamination assessment offers protection for you, and assurance for any buyers in the market. Assessing your site before sale provides baseline data for the site at the time of sale, indicating the contamination status of the site at the end of the seller’s occupation. Assuming the site is not impacted (or is minimally impacted) as a result of the seller’s occupation, the existence of a contamination assessment report can increase buyer confidence, potentially resulting in a higher sale price. Additionally, as added security for the seller, the report will indicate the degree of impact left from the land use activities before the point of sale. Should contamination be identified in the future, the report may prevent or limit the liability of the seller.

It is important to understand that contamination is not always visible. Contamination may be present in the groundwater underlying a site, or within the pore space within the soil. This is particularly common within industrial land where liquid or gaseous products such as solvents or petroleum products have previously been stored or used. There are often no visual indicators for this contamination, and as such, a professional investigation is often essential for a buyer or sellers’ due diligence.

Due diligence assessments 

In undertaking due-diligence assessments, SESL conducts a review of the site history (historical aerial photos, title searches, dangerous goods review, etc.) as well as a detailed site walkover, sampling and analysis. We can usually offer fast turnarounds for these reports, allowing our clients to make informed decisions when purchasing.

Get in contact with our experienced consulting team if you have any questions about due diligence associated with purchasing or selling potentially-impacted land.