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If it’s contaminated, it can’t be a secret

If you are selling or leasing land, it is important to be aware of whether your land is, or potentially could be, contaminated. It’s as straight forward as ordering a search of the Contaminated Land Register (CLR) or Environmental Management Register (EMR). The cost of ordering a search is low, however the consequences of not doing a search or not notifying a tenant of contaminated land can have costly legal consequences.

The CLR and EMR are public registers containing information about contaminated land in Queensland. The EMR also includes details on land which is, or could be, contaminated as a result of an activity that could cause contamination.

If you are selling land that is on either or both the CLR and EMR, or is reasonably likely to be contaminated and warrants being registered on the EMR, you must notify your buyer. If land you are intending to lease is on the CLR, you must likewise notify your proposed tenant.

Understanding your legal obligations as a land owner either selling or leasing land listed on either of these registers is essential in avoiding a buyer or tenant having grounds to terminate the contract or lease, or being faced with penalties. While critical changes to these legal obligations (under the Environmental Protection Act 1994 (Qld) (EPA)) came into effect back in October 2015, all too often these obligations can easily be overlooked.

The legal changes made to the EPA in relation to contracts of sale has restricted the termination rights of the buyer, benefiting the land owners. The timeframe in which a buyer can terminate the contract has been limited. This ultimately provides greater certainty for land owners in circumstances where they fail to give notice of the land being listed on the EMR or CLR prior to the contract being entered into.

These changes mean that the land owner selling land listed on the EMR or CLR can give notice to that effect after the contract of sale has been entered into, if they have not given notice prior to entering into the contract. Within 21 days of receiving this notice, the buyer has a right to terminate the contract without penalty. If the buyer does not terminate within this period, they are taken to have waived the right to terminate.

Previously, where a sale involved land listed on the EMR or CLR, the owner had to provide written notice of the land being listed on either register prior to entering into the contract. If notice was not given, the buyer could terminate the contract at any time up to and including the settlement date.

Similar notice requirements exist in relation to leasing a property listed on the CLR. Prior to entering into a new lease, an owner of land listed on the CLR must provide written notice to the tenant. If the land subsequently becomes listed on the CLR, during the lease term, the owner must notify the tenant within 20 days of that occurring.

If the owner of leased land does not comply with these notice requirements, the tenant may give written notice terminating the lease. The tenant must give notice within 10 days of becoming aware of the recording on the CLR. Similarly to a contract of sale, if a tenant fails to give notice in this timeframe they waive their termination right.

While the required timeframe for notice for new or pre-existing leases did not change, it is crucial that land owners are aware that this obligation to notify exists. It seems to be more commonly dealt with under contracts of sale and not leases.

To avoid additional costs or setbacks, owners, buyers and tenants should conduct a search of the EMR and CLR when entering a contract for the sale or purchase of land, or when entering into a new lease. This will ensure they can comply with their duty to notify or their right to terminate. The CLR and EMR search can be done by the owner, buyer or tenant, or a lawyer can do it on their behalf.

"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."