Environmental Tenancy Assessments and Audits
Who is responsible for contaminated land?
Part IIA of the Environmental Protection Act, 1990 imposes a regime of “strict liability”, in terms of contamination. This means that the “person responsible” has a positive obligation to prevent the contamination regardless of fault.
What is the liability for landlords and tenants?
Where historically commercial land is being leased, and/or where the activities of commercial tenants have the potential to cause contamination, a landlord could potentially be liable for historical pollution as well as pollution caused by the tenant. Many commercial contracts omit specific clauses relating to environmental liability, instead, relying on standard lease terms, tenancy agreements and tenant covenants to determine liability.
As most site investigation and remediation takes place through the redevelopment of land under the planning regime, it may be many years after a commercial tenancy has concluded that contamination is eventually identified. Where multiple tenancies have taken place, it may not be possible to attribute liability to the tenant that caused the contamination. If the tenant company has ceased trading it may not be possible to transfer liability or claim compensation. In such cases, the cost of clean-up would be borne by the landowner either directly or through a reduction in the value of the land.
Tenants too will want to ensure that they are not responsible for historical pollution. If present, contractual clauses relating to contamination may state that the tenant is responsible for all environmental liability regardless of cause. Accepting liability for third party activities that occurred prior to, during or after the tenancy may expose the tenant to significant financial risk.
To minimise the risk of liability, both the tenant and the landlord should agree a “baseline” environmental condition of the property at the commencement of the lease. This may involve a review of any historical environmental reports and may necessitate a site investigation to collect soil and water samples before the baseline can be established. Depending on the nature of the commercial operation, it may be appropriate to periodically conduct inspections and environmental audits throughout the term of the lease. On termination of the tenancy, the environmental condition of the site should be assessed again to limit onward liability for both parties.