Real Estate Transactions and Recent Amendments to the Environmental Management Law and Contaminated Sites Regulation – Real Estate and Construction

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Canada: Real estate transactions and recent amendments to the law on environmental management and the regulations on contaminated sites

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On February 1, 2021, changes to the Environmental Management Act (EMA) and the associated amendments to the Contaminated Sites Regulation relating to the process for identifying contaminated sites have come into force. A notable amendment for commercial real estate lawyers is the replacement of the old “site profile” with a “site disclosure statement” in the context of a sale or redevelopment of a site that has been. used for a specific industrial / commercial activity.

Site Disclosure Statements

Pursuing basically the same purpose as a site profile, a site disclosure statement is a form that requests information about the past and present uses of a site to identify the potential requirement for a site investigation or to disclose past uses that may have caused contamination of the land to a potential purchaser as part of due diligence. Unless a buyer waives it at their discretion (as permitted by regulation), a seller of real estate must deliver a location disclosure statement to a buyer 30 days before making a transfer if the seller knows or reasonably should know that the property has been used for a particular industrial or commercial use specified in Schedule 2 of the Regulations.

Government of British Columbia Site remediation website highlights a number of changes made to the list of triggering uses in appendix 2. Several exemptions have also been added, in particular for a rezoned property where there is no change to the activity or to the active subdivision of Annex 2 to cause a minor to adjust the limits or consolidate the lots. The most important differences between the site profile and the site disclosure statement forms are the additional requirements to provide a summary of the proposed land uses and the information used to complete the site disclosure statement that applies to operations. land use requiring municipal approval and not a property sale.

Considerations

Contaminated sites present business and financial risks to both sellers and buyers of real estate, and thorough due diligence is always advised in a buy and sell transaction. However, completing and providing a site disclosure statement involves time, effort, and cost which may not be available and / or useful to the parties. For this reason, British Columbia purchase and sale contracts typically contain standard disclaimer language for properties that have been subject to a seller’s requirement to provide a site profile under the EMA. .

The additional uses that trigger the requirement for a real estate seller to submit a site disclosure statement may increase the likelihood that a seller will want the buyer to waive this requirement as part of the closing process. If so, the changes relevant to commercial real estate practitioners in the context of buy and sell agreements that contain site disclosure statement waiver language are minimal.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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