Property law: Dirty land deals

The site may be 'blighted', making it difficult to sell or lease and the use of the land for certain purposes may be impossible or only possible if extensive (and expensive) clean-up works are undertaken.

As a potential buyer you should be aware of the legal and financial consequences of buying land which is already contaminated. First of all, a potential purchaser of contaminated land will face statutory liability for clean-up costs, which are likely to be considerable - in one case, a developer bought a site for commercial development only to discover that the site had at one time been used as a steel mill and the clean-up costs exceeded the purchase price.

Additional risks are the potential civil liability for damage caused by migrating pollution and the potential criminal liability for offenses resulting from polluted land.

There are number of matters to be considered before it can properly be decided whether or not to go ahead with the acquisition of a particular real estate. Although, in practice, it will be obvious in many cases whether or not the acquisition is risky, there always a margin of uncertainty.

Therefore, a series of in-depth due diligence examinations assessing the potential acquisition from the legal, tax, environmental and technical perspective done by seasoned practitioners may help to eliminate "contaminated" properties. The old proverb proves true: prevention is always better (and cheaper) than the cure.

Patryk Figiel is an associate with Linklaters law firm. E-mail: patryk.figiel@linklaters.com