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Importance of Environmental Risk Assessment in Real Estate Development

If you’re a real estate entrepreneur looking to buy land for commercial development, getting an environmental risk assessment should be an important influencer of your buying decision. If the land or building you’re planning to purchase has been used for any kind of industrial production, or if the area is prone to natural environmental risk factors, the land may be contaminated and therefore unfit for construction.

Definition of Contaminated Land

Contaminated land or real estate refers to a property or land that has been used for commercial manufacturing or processing that has left it riddled with high level of pollutants. That said, not every industrial property is contaminated. Contamination occurs when a previous occupant failed to follow safe production and handling methods in the manufacture, processing or storing of hazardous materials.

Contamination of land usually occurs from leakage, faulty waste disposal or spilling caused by unsafe and careless handling of industrial materials.

Risks of Building on Contaminated Land

Contrary to popular belief, land contamination does not only occur from harmful chemicals and other materials—such as pesticides, mercury, phosphate, lead, uranium, methane, radon, etc.—seeping into soil and groundwater. Several seemingly harmless substances can also lead to soil and groundwater contamination. These include manure, animal waste, human waste, and other organic substances.

Contaminated land and property are considered dangerous as they face a high risk of fire, explosion, structural damage, bad odor, groundwater contamination, and general environmental damage to the area.

As real estate purchase and development is a high-investment business, environmental risk assessment has fittingly become an integral part of property transactions of every size and scale. Before you buy real estate, it is important to contact the local municipal agency as well as a reputed environmental risk management firm for a detailed risk assessment of the land or property you’re looking to buy.

A Primer on Industrial Activities Linked to Land Contamination

To aid your decision-making when you first come across a property you’re interested to purchase, here is a list of commercial activities that are generally associated with contaminated sites. If you learn that any of the following high-risk activities have taken place at your chosen site, an environmental clearance becomes all the more important.

  • Manufacturing o processing of hazardous chemicals
  • Manufacture of rubber products
  • Manufacture of plastic or plastic products
  • Extraction or processing of metals
  • Extraction, processing or storage of fossil fuels or minerals
  • Manufacture, repair and storage of two-wheelers, four-wheelers, airplanes or trains
  • Production of paper
  • Processing or storage of household or commercial fuels
  • Manufacture of building materials such as cement, bricks or asphalt
  • Production of food products derived from plants or animals
  • Treatment of contaminated soil or water
  • Treatment of wastewater

Decontamination

Based on local laws and environmental regulations, companies using a site for high-risk activities are required to carry out a clean-up and submit an environment safety report to the concerned local authority at the time of vacating or selling such premises.

If the seller of your chosen site has not done so or if the previous occupant responsible for the contamination is not known, it becomes even more important for you, the buyer, to contact the local authority and seek legal guidance on the way forward.

Decontamination should ideally not be the responsibility of the buyer; however, regulations vary from state to state, so it’s important to gather pertinent information and guidance on the subject. It is not viable to buy a land or building that is not fit for the activities you intend to carry out at the premises.

Key Steps in Environmental Risk Assessment

A professionally done environmental risk assessment is a thorough and in-depth process that could take several weeks. Hiring a reliable and experienced environmental consultancy for the job, such as the Brighton-based http://www.argyllenvironmental.co.uk/, is essential to ensure proper procedure is followed and a detailed, easy-to-understand analysis is provided at the end.

The main steps in an environmental assessment plan include:

  1. Seek the site’s past occupant history as well as environmental records from the local authority
  2. Identify hazardous activities carried out at the premises in the past
  3. Determine the impact of the those activities on the structure, land, soil, water and surrounding environment
  4. Determine the possible harmful effects of the contamination
  5. List remedial measures and precautions
  6. Take up feasible decontamination measures

If your real estate company is planning to buy or develop a property on a land exposed to environmental damage, get an environmental risk report before taking the plunge.

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