Buying Residential Real Estate: What if the Soil Is Contaminated?



For many, becoming a homeowner or a residential income property owner is a milestone that rhymes with freedom: owning your piece of land, making plans and investing for your future. But what about the other side of the coin? To the residential purchases that turn into nightmares because of hidden defects or soil contamination that went under the inspection radar?


And contamination in a residential setting means financial considerations. A lot of financial considerations.


Contaminated Sites: Issues Specific to the Residential Sector

As mentioned in our last article on contaminated soils in commercial or industrial realty, contaminated land is land characterized by a high presence (i.e above natural levels) of harmful substances affecting human and environmental health.


Contaminated residential realty brings its own set of concerns, but the issue is primarily financial. Financial because a contamination issue threatens to devalue the market value of the property, to compromise the sale, to incur significant amounts of rehabilitation and potentially lead to a withdrawal of the mortgage loan. In fact, some financial institutions that guarantee a loan make the granting of this loan conditional on the completion of complete rehabilitation work.


Let also mention that the risks associated with soil contamination are tangible for families. In the presence of high concentrations, contaminants become airborne micro-particles that can be inhaled or ingested by residents in their own living environment, or can come into skin contact with the soil. Thus, the physical health of families is quickly threatened and the possibility of urban agriculture is ruled out (the soil contamination being so deep that it can spread to the plantations and reach the edible part).


Fortunately, more and more platforms are available to provide buyers with information on the status and history of contaminated land across the province. This is notably the case with the Contaminated Sites Inventory produced by the Ministère de l'Environnement et de la Lutte contre les changements climatiques (MELCC). The compilation is not exhaustive, but the tool identifies cases of contaminated land brought to the attention of the Ministry. In parallel with the provincial tools, some municipalities are seeing their disclosure obligations tightened. For the cities of Montreal and Trois-Rivières, for example, real estate brokers or sellers are required to disclose to buyers the fact that the property is located on a quarry, landfill or dump site, if this is the case. In response to too much misappropriation or failure to disclose information, see the Map of Former Quarry and Surface Deposit Locations made available in 2016 for any purchase in Montreal in response to the attention being drawn to the historicity and toxicity of quarry, fill or dump sites.


Obviously, personal research is not a panacea, but in an industry where hidden defects and misappropriation of information are commonplace, it is a practice worth advocating.


Environmental site assessment: avoiding unpleasant surprises

Requiring a Phase I and Phase II Environmental Site Assessment (ESA) is the most important action to take before purchasing a home.

The Phase I establishes the complete history of environmental and contamination risks demonstrated by the property, while the Phase II takes soil samples for laboratory analysis. A properly conducted ESA allows you, among other things, not to be held responsible for the eventual remediation of the land, if it is found to be contaminated as a result of activities carried out before you. Moreover, the ESA is increasingly required by banking institutions to conclude the deed of purchase.


Warning! ESAs that are conducted in an overly cursory manner can hide information, while others, conducted with bad intentions, can falsify information by claiming “contaminations”, simply to obtain highly profitable decontamination contracts!


Enutech is committed to conducting thorough and rigorous ESAs, according to your specific needs, and to disclosing the results in full. Transparency is a value that permeates everything we do. We often associate decontamination with heavy excavation work as well as noise and visual pollution that takes over our property. Fortunately, innovative and eco-responsible technologies now make it possible to carry out heavy decontamination work in a non-invasive manner, taking into account the specificities of each site treated and with a very low carbon footprint. Enutech uses in-situ injections to perform remediation work in all types of sectors, including residential.


Whose burden is it?

The Environment Quality Act (EQA) does not recognize the obligation for a property owner to remediate a contaminated residential property or to publish a notice of contamination in the land registry. This is the main difference with the commercial and industrial sectors, where owners are required to do so, under penalty of cessation of activities or zoning change.


According to many experts, ordering a complete ESA should be the responsibility of the seller. This proves his involvement in the sale of his property, the soundness of his approach and the conformity of the property itself. However, a buyer who is never too careful can always order an additional ESA to ensure the veracity of the one mandated by the seller and, once again, avoid unpleasant surprises.


Notorious fact: whether the sale of the property is carried out with or without a legal guarantee, in no case can the seller escape the responsibility that binds him to a possible situation of contamination of the property at the time of the sale, because he will have declared in the seller's declaration that there was no underground tank. The same applies to a contamination situation; the owner does not escape his responsibility. Liquid contaminants, such as heating oil, can spread very quickly, putting neighbouring properties at risk. Neighbors are therefore in a position to take legal action against the owner on the grounds that the owner has not fulfilled his duty of due diligence.


The role of the municipality can also be biased. Indeed, admitting the contamination of residential land on its territory leads to a formal registration of these contamination notices in the land register, which ultimately can cause a real estate and property devaluation, a decrease in the taxes collected and a degradation of the real estate stock. Nothing that encourages municipalities to address the issue head on!


One thing is for sure: the purchase of a residential property must be accompanied by the presence of experts and third parties in order to avoid hidden defects that could prove extremely costly. Costly from a financial point of view of course, but also costly for the health of the residents of said property as well as for the environmental health of the soil and/or groundwater.


References

« Votre maison est-elle construite sur un terrain contaminé? », Écohabitation, https://www.ecohabitation.com/guides/3498/votre-maison-est-elle-construite-sur-un-terrain-contamine/


« Sols contaminés », Santé Montréal, https://santemontreal.qc.ca/professionnels/drsp/sujets-de-a-a-z/sols-contamines/information-generale/?utm_campaign=ecohabitation&utm_source=ecohabitation.com&utm_medium=referral&utm_content=/guides/3498/


« Des terrains résidentiels contaminés: quoi faire? », Journal Métro, https://journalmetro.com/local/montreal-nord/593463/des-terrains-residentiels-contamines-quoi-faire/


« Comment savoir si ma maison est sur un terrain contaminé? », Allo Inspecteur, https://www.alloinspecteur.com/comment-savoir-si-ma-maison-est-sur-un-terrain-contamine/

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