Sunday, June 10, 2012

Environmental Sites and Contamination in Selling or Leasing Commercial Property Today

coin in spanner
Environmental contamination is costly.
Factors of the environment can impact the sale or lease of commercial or industrial property.  Given that you work as an agent in the market, you should have a system to identify and qualify any matters of environmental challenge when it comes to listing a property.  Failure to address this at the listing phase will see problems develop later when it comes to property inspections and negotiation.

Here are some rules that can apply to the environmental challenges that could apply with the listed property.
  • Do detailed checks when it comes to the current ownership of the property, and the previous property usage.  You can find that the property has had a history of tenants or owners that were some concern when it comes to environmental issues.  This can certainly be the case in industrial property types.
  • Inspect the property currently and identify any immediate concerns that need more information.  When in doubt, seek the assistance of engineers and consultants familiar with environmental matters.
  • Record in writing and in note form the information that you have identified regards the property today and at time of listing.  Those records will come in handy should anyone challenge or question the usage of the property or any current facts.
  • If the property is leased to an industrial type business, or a medical business, review a copy of the existing lease documentation to see if any special provisions apply to the usage of the property and matters relating to the environment.  The tenant may be obliged to take particular actions under the lease regards the environment.
  • Look for any restrictive covenants that may impact the usage of the property such as easements, rights of way, and encumbrances.  Also ask questions regards notices and orders that could have been applied to the property by the local building authority or municipal council.
  • The property as it exists today should be legally suitable for its prevailing use and property location.  The property owner and any tenants within the property should be complying with those covenants and legal rules.  Look at the permitted use factors as detailed in any lease documentation.  Check that those permitted use factors agree with the rules and regulations in the local development plan.
  • If the property has had matters of the environment or contamination handled previously, get copies of the relative remediation actions taken then and refer the detail to experts that understand the standards of remediation today. There may be discrepancies to be qualified.

Define the rights and obligations that apply to the tenant and the landlord within the property.  There may also be special responses required of the property owner or the tenants relating to health and safety, building structure, refuse and waste, storm water, drainage, and personal safety.  Ask questions and look at the lease relating to the property or tenancy.

These factors can be formulated into a checklist relating to the property type and your location.  Take time to formulate this checklist early in your career and improve it as new items or environmental factors can be found.  It will make your job a lot easier and keep you away from the problems of overlooking critical facts and property challenges.

Need some ideas to help you list commercial or retail property?  You can get our Newsletter here.