Real Estate Transactions and Recent Changes to Environmental Management Act and Contaminated Sites Regulation

Written By Mark Lewis, Sharon Singh and Mandev Mann

On February 1, 2021, amendments to the Environmental Management Act (EMA) and associated changes to the Contaminated Sites Regulation relating to the process for identifying contaminated sites came into force. A notable amendment for commercial real estate lawyers is the replacement of the former "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

Fundamentally serving the same purpose as a site profile, a site disclosure statement is a form that requires information about the past and present uses of a site to identify the potential requirement of a site investigation or to disclose past uses that may have caused land contamination to a prospective purchaser as a part of due diligence. Unless waived by a purchaser in its discretion (as permitted pursuant to the Regulation), a vendor of real property must deliver a site disclosure statement to a purchaser 30 days prior to completing a conveyance if the vendor knows or reasonably should know that the property has been used for a specific industrial or commercial use specified in Schedule 2 of the Regulation.

The B.C. Government's Site Remediation website highlights a number of changes made to the list of the list of triggering uses under Schedule 2. Several exemptions have also been added, including for a property undergoing rezoning where there is no change to the active Schedule 2 activity or subdivision to bring about a minor boundary adjustment or lot consolidation. The most significant differences between the site profile and the site disclosure statement forms are the additional obligations to provide a summary of proposed land uses and the information used to complete the site disclosure statement that apply to land use operations requiring municipal approval and not to a sale of property.

Considerations

Contaminated sites pose commercial and financial risks to both vendors and purchasers of real property, and thorough due diligence is always advised in a purchase and sale transaction. However, completing and providing a site disclosure statement involves time, effort and costs that may not be available and/or worthwhile to the parties. For this reason, B.C. purchase and sale agreements commonly contain standard waiver language for properties that have been subject to the requirement for a vendor to provide a site profile under the EMA.

The additional uses that trigger the requirement for delivery of a site disclosure statement by a vendor of real property may make it more likely that a vendor will want the purchaser to waive this requirement as part of the closing process. If so, the relevant changes for commercial real estate practitioners in the context of purchase and sale agreements that contain site disclosure statement waiver language are minimal.

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