Pre-contract searches and enquiries - Environmental searches

Learning Outcomes

This article explains the role and importance of environmental searches within the conveyancing process. It details the types of environmental searches available and the key legal principles governing potential liability for contaminated land under the Environmental Protection Act 1990. After reading this article, you should be able to identify when environmental searches are necessary, interpret their results, and advise clients on the associated risks and potential mitigation strategies, such as indemnity insurance, as required for the SQE1 assessments.

You should also be able to distinguish the statutory contaminated land regime under Part 2A EPA 1990 from planning controls that address contamination through conditions on development, and understand the practical interaction between environmental search outcomes, lender requirements, and contract strategy. Competence includes recognising when to escalate from a desk-based report to Phase I and Phase II site investigations, how to address adverse findings in negotiations and contract drafting, and how to deploy environmental indemnity insurance appropriately without undermining its availability.

SQE1 Syllabus

For SQE1, you are required to understand the purpose and implications of environmental searches from a practical conveyancing context, including the identification of potential environmental risks and advising clients accordingly, with a focus on the following syllabus points:

• The reasons for conducting environmental searches in property transactions.
• The concept of contaminated land under the Environmental Protection Act 1990, Part 2A.
• The potential liabilities for landowners regarding contaminated land, including remediation costs.
• The different types of environmental searches available (eg desktop reports, specific searches).
• Interpreting the results of environmental searches and advising clients on the findings and potential solutions.
• How local authority searches (LLC1/CON29/CON29O) interface with environmental risk, including contaminated land determinations and remediation notices.
• The roles of the local authority and the Environment Agency, including the designation of special sites and the service of remediation notices.
• When to commission Phase I and Phase II environmental investigations and the implications of their findings for buyers and lenders.
• The use, scope, and limitations of environmental indemnity insurance, and how insurance interacts with further investigations and disclosure.
• The impact of flood, mining, and radon risk assessments on valuation, insurability, and mortgageability.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Under which primary piece of legislation is the regime for contaminated land established in England and Wales?
   1. Water Resources Act 1991
   2. Environmental Protection Act 1990
   3. Town and Country Planning Act 1990
   4. Environment Act 1995
2. Who bears the primary responsibility for the remediation costs of contaminated land under the 'polluter pays' principle?
   1. The current landowner
   2. The local authority
   3. The person who caused or knowingly permitted the contamination
   4. The Environment Agency
3. Which type of environmental search provides an initial assessment based on existing records and historical data?
   1. Phase II Intrusive Site Investigation
   2. Desktop Environmental Report
   3. Flood Risk Assessment
   4. Asbestos Survey

Introduction

Pre-contract searches and enquiries are a critical part of the due diligence process undertaken by a buyer's solicitor. Among these, environmental searches play an important role in identifying potential environmental liabilities associated with the property. Understanding the potential risks, the relevant legal framework, and the practical steps involved in environmental searches is essential for advising clients effectively in property transactions.

Environmental due diligence complements, rather than replaces, other core searches. Replies to standard local authority enquiries (CON29) can indicate whether the land has been designated as contaminated or whether remediation notices have been served, and optional enquiries (CON29O) can reveal environmental and pollution notices. However, reliance on local authority replies alone is not sufficient: a negative reply may simply mean the local authority has not inspected or determined the site. A dedicated environmental search is therefore routinely commissioned in most transactions, often together with a flood search.

Environmental searches are typically ordered early, once instructions are confirmed and funds on account have been obtained for disbursements. Many firms use online search providers or the National Land Information Service (NLIS) channels to order multiple searches concurrently, improving efficiency and turnaround time. The principle of caveat emptor underpins this stage: sellers have limited duties of disclosure, so the burden is on the buyer’s solicitor to obtain and interpret information held by public bodies and commercial data providers and to advise on its implications for use, value, marketability, and security for lending.

Contaminated Land Regime

The primary legislation governing contaminated land in England and Wales is the Environmental Protection Act 1990 (EPA 1990), specifically Part 2A, which was inserted by the Environment Act 1995.

Definition of Contaminated Land

Part 2A of the EPA 1990 defines contaminated land as any land which appears to the local authority in whose area it is situated to be in such a condition, by reason of substances in, on or under the land, that:

• Significant harm is being caused or there is a significant possibility of such harm being caused; or
• Significant pollution of controlled waters is being caused or there is a significant possibility of such pollution being caused.

Key Term: Contaminated Land
Land where substances could cause significant harm to people or protected species, or significant pollution of surface waters or groundwater.

Local authorities have a duty to inspect their areas to identify contaminated land and maintain a public register of regulatory actions taken under the regime (eg remediation notices, remediation statements, and appeals). Not every site with contamination is determined under Part 2A; the statutory threshold (“significant harm” or a “significant possibility” of such harm) is high and formal determinations are relatively rare in practice. Many sites with contamination risks are managed through the planning system, with planning conditions requiring investigation and remediation as part of development.

“Controlled waters” include inland freshwaters, coastal waters, and groundwater. The statutory guidance assists regulators in assessing whether there is a “significant possibility” of harm by reference to risk assessment principles, considering the presence of a contaminant, a receptor (e.g. human health, controlled waters, ecosystems), and a pathway linking them (the source–pathway–receptor model).

Liability for Remediation

The regime establishes a framework for determining liability for the remediation (clean-up) of contaminated land. The guiding principle is the polluter pays principle.

Key Term: Polluter Pays Principle
The principle that those who cause pollution should bear the costs of managing it to prevent damage to human health or the environment.

Liability rests primarily with those who “caused or knowingly permitted” the contaminating substances to be in, on or under the land (Class A persons). If, after reasonable enquiry, no Class A person can be found, liability passes to the current owner or occupier of the land (Class B persons). Regulators can apportion liability between multiple appropriate persons and may consider exclusion tests and hardship when deciding how costs should be allocated and recovered in accordance with statutory guidance.

This potential liability for current owners, even if they did not cause the contamination, highlights the importance of environmental searches during the pre-contract stage. A buyer could unknowingly acquire significant clean-up costs. In addition to liability under Part 2A, parties may also face common law claims (e.g. private nuisance) arising from the migration of contaminants, though statutory control is the principal focus in conveyancing due diligence.

Remediation Notices

Once land is formally designated as contaminated, the local authority (or the Environment Agency for certain “special sites”) must serve a remediation notice on the appropriate person(s) specifying the required clean-up works and the timeframe for completion. Regulators often seek voluntary remediation by agreement before issuing a notice, but they can also carry out works themselves and recover costs. Failure to comply with a remediation notice is a criminal offence, and there is a right of appeal against such notices.

Key Term: Remediation Notice
A notice served by a regulatory authority requiring action to be taken to clean up contaminated land.

Key Term: Special Site
A contaminated land site for which the Environment Agency, rather than the local authority, is the enforcing authority (for example, certain cases of pollution of controlled waters or specified industrial land uses).

The designation of a site as contaminated land, and any related remediation notice or statement, will appear on the public register and should be revealed in local search results. This has consequences for value, insurability, and mortgageability and must be reported to a buyer and any lender.

Types of Environmental Searches

Several types of environmental searches are commonly used in conveyancing.

Desktop Environmental Reports

This is usually the first step and involves a review of databases and historical records relating to the property and surrounding area.

Key Term: Desktop Environmental Report
A report compiled from existing data sources (eg historical maps, regulatory records, geological data) to provide an initial assessment of potential environmental risks at a property, without a site visit.

These reports typically assess risks from:

• Historical land use (eg former industrial sites, landfill sites, petrol stations).
• Proximity to potentially contaminative activities (current and past).
• Flood risk (though specific flood searches are often separate).
• Ground stability issues (eg mining, subsidence).
• Radon gas presence.
• Other factors like overhead power lines or telecommunication masts.

A desktop report will classify the potential risk, often indicating whether further investigation is recommended. Most providers include an assessment against the Part 2A threshold (likelihood of the site being determined as contaminated land) and recommend whether a Phase I or Phase II investigation is advisable. Reports commonly include limitations and reliance terms; where a lender is involved, ensure the report is addressed to or reliance is extended to the lender.

Desktop results should be considered alongside local search replies. For example, the standard CON29 enquiry can reveal a contaminated land determination or a remediation notice already served, while optional CON29O enquiries can reveal environmental and pollution notices. A “pass” on a desktop report does not preclude other environmental risks revealed elsewhere (e.g. flood, radon) and does not guarantee the absence of contamination; it is a screening tool to guide next steps.

Worked Example 1.1

A buyer is purchasing a residential property built on land previously occupied by a petrol station. The desktop environmental report highlights a potential risk of soil and groundwater contamination from fuel leakage. What advice should the solicitor give?

Answer:
The solicitor should advise the buyer of the potential risk identified in the report and the implications of liability under the EPA 1990 Part 2A regime. They should recommend commissioning a Phase II Intrusive Site Investigation to ascertain the actual level and extent of contamination before proceeding further with the purchase. The buyer should also be advised to inform their lender, as the findings may affect the mortgage offer. Depending on the Phase II results, the buyer might seek a price reduction, require the seller to remediate, or withdraw from the purchase.

Worked Example 1.2

A desktop environmental report gives a “Pass” against Part 2A risk but notes “moderate to high” surface water flood susceptibility. The property is not near a main river. How should this be addressed?

Answer:
Advise commissioning a property-specific flood search to assess surface water and groundwater flooding in detail, and ask the seller about any history of flooding or insurance claims. Discuss insurability and premiums with an insurance broker; for an owner-occupied residential property, Flood Re may assist, but it will not apply to commercial, buy-to-let, or post-2009-built properties. Report findings to the lender. Depending on risk and insurability, consider price negotiation and flood mitigation measures or, if risk is unacceptable, withdrawal.

Worked Example 1.3

Local search replies (CON29) state that an adjoining site has been determined as contaminated land and that a remediation notice has been served on a third party. The desktop report for the target property shows no direct contaminative use. What next?

Answer:
Explain potential migration risks from the adjoining land and the possibility of off-site impacts on the target property’s soil, groundwater, or vapour. Consider instructing a Phase I Environmental Site Assessment, including a site walkover and conceptual site model, to evaluate pathways and receptors. Depending on Phase I outcomes, a targeted Phase II may be needed. Report to the lender, and consider contractual protections (warranties, retention, or conditions precedent) and insurance options.

Specific Searches

Depending on the location and nature of the property, or the findings of a desktop report, more specific searches may be necessary:

Key Term: Flood Search
A property-specific search assessing river, coastal, surface water, and groundwater flood risks, typically including historic claims data and insurability indicators.

• Flood Search: Assesses risks from river, coastal, surface water, and groundwater flooding. Provides more detail than the flood risk indicators often included in broader environmental reports. Consider in all transactions, not just near rivers or the coast, as surface water and groundwater flooding can occur anywhere.
• Mining Search (eg CON29M): Essential in coal mining areas; reveals information about past, present, and future mining activities, subsidence claims, and mine entries. Similar searches exist for other minerals (eg tin in Cornwall/Devon/Somerset; clay in Cornwall/Devon/Dorset; limestone in parts of the West Midlands; brine/salt in Cheshire).
• Radon Gas Search: Identifies if the property is in an area known for high levels of radon gas, a naturally occurring radioactive gas.

Key Term: Radon
A naturally occurring radioactive gas that can accumulate in buildings, presenting a health risk. Searches indicate whether basic or full protective measures are recommended; mitigation may be needed.

• Chancel Repair Liability Search: While not strictly an environmental search, it can expose significant unexpected liabilities. Liability generally no longer binds registered land following a transfer for value on or after 13 October 2013 unless protected by notice, but searches remain common where status is unclear.

Other location-specific checks may be relevant to environmental risk, such as Canal & River Trust searches for properties adjoining waterways (maintenance/liability, flood defence interactions) or highways searches to clarify adopted highway boundaries where verges or strips could affect access and drainage solutions.

Environmental Surveys (Phase I and Phase II)

If initial searches indicate a significant risk, more detailed site investigations may be required. The usual progression is:

Key Term: Phase I Environmental Site Assessment
A desk study and site reconnaissance to identify potential contamination using historical records, a site walkover, and a conceptual site model linking sources, pathways, and receptors.

• Phase I Environmental Site Assessment: Usually involves a site walkover, interviews (where available), review of historical maps and regulatory records, and development of a conceptual site model. Its purpose is to confirm whether a plausible risk exists and to scope any intrusive work needed.

Key Term: Phase II Intrusive Site Investigation
Physical sampling and laboratory analysis of soil, groundwater, surface water, and/or soil gas to confirm the presence, type, and extent of contaminants and assess risk against relevant screening criteria.

• Phase II Intrusive Site Investigation: Involves boreholes and trial pits, sampling and analysis, and risk assessment against appropriate screening values. It provides definitive evidence of contamination and informs remediation options and costings.

When commissioning intrusive works, ensure access rights, consider safety, and factor the time needed for permitting and laboratory turnaround. Where a contract is to be exchanged before investigations are complete, consider conditional contracts (eg conditional upon satisfactory environmental investigations) with appropriate longstop dates, or agree retentions or escrow arrangements to secure remediation commitments.

Exam Warning

Liability for contaminated land can be substantial, potentially running into hundreds of thousands or even millions of pounds for remediation. Always advise buyer clients of the potential risks, even if initial searches seem clear, especially for commercial or previously industrial sites. Ensure lenders are fully informed of any adverse findings.

Practical Implications in Conveyancing

The results of environmental searches have significant practical implications:

• Informing the Buyer: The primary purpose is to inform the buyer of potential risks and liabilities. Environmental risks affect suitability for intended use, safety, and value. Where a risk is identified, explain the regulatory regimes that may be engaged (Part 2A, planning conditions, building regulations for radon protection) and the options to mitigate or avoid the risk.
• Reporting to Lender: Lenders require reassurance that the property offers good security. Adverse environmental findings must be reported and may lead to refusal to lend, retention of funds, or specific conditions requiring remediation or insurance. Under the UK Finance Mortgage Lenders’ Handbook, standard searches should be current (typically no more than six months old at completion) and any matters affecting value or marketability must be disclosed.
• Negotiation Point: Identification of contamination risk can be used to negotiate the purchase price or require the seller to undertake remediation work before completion. Consider requesting documentation relating to any prior site investigations, remediation statements, verification/validation reports, and any regulator sign-off. Where remediation is to be done by the seller, require a specification, supervision by a competent consultant, and provision of completion reports.
• Contractual Provisions: Special conditions might be added to the contract, such as warranties from the seller regarding contamination, obligations to remediate to defined standards, rights for the buyer to monitor works, retentions or escrow to secure performance, or conditions precedent for satisfactory investigations. If remediation will continue after completion, consider step-in rights, use restrictions pending completion, and longstop dates.
• Insurance: Environmental indemnity insurance may be available to cover potential future remediation costs or third-party claims, particularly where risks are identified but cannot be fully quantified or remediated pre-completion. Insurance is not a substitute for due diligence and typically excludes known contamination and deliberate acts. Consider sequencing carefully: approaching regulators or commissioning intrusive investigations may affect insurability.

Key Term: Environmental Indemnity Insurance
A policy that may cover losses arising from unknown contamination or regulatory action, often used to manage residual risks where full remediation or investigation is impractical pre-completion.

• Due Diligence Strategy and Sequencing: Decide, with the client and lender, whether to proceed directly to insurance, to commission further investigation, or to negotiate remediation. In some cases, raising enquiries of regulators or neighbours may jeopardise the availability of insurance. Take instructions on the client’s risk appetite, timescales, and intended use.
• New Homes and Warranties: For new homes, developer warranties (such as NHBC) can include limited cover for contamination remediation for a defined period. Review the scope, duration, and exclusions carefully.
• Ongoing Management: Where contamination is being managed in situ (eg through capping layers or gas protection), ensure the buyer understands maintenance obligations, access rights for monitoring, and the impact on future works or extensions.

Worked Example 1.4

A commercial buyer intends to redevelop a light industrial site into residential units. The environmental desktop report recommends a Phase I, and the buyer’s surveyor anticipates a need for intrusive investigations and likely remediation. The seller wants an unconditional exchange within three weeks.

Answer:
Advise against unconditional exchange. Recommend either (i) a conditional contract, conditional upon satisfactory Phase I and (if indicated) Phase II investigations with a longstop date; or (ii) a price reduction with a retention/escrow to fund remediation, coupled with detailed remediation obligations on the seller and warranties. Confirm the lender’s position. Environmental insurance may be considered for residual risk once the extent of contamination is better defined.

Worked Example 1.5

A residential property falls within a high radon area per searches. The buyer is concerned about health risks and mortgageability.

Answer:
Explain that radon risk is not “contaminated land” under Part 2A, but a health hazard managed by building regulations and mitigation measures (e.g. radon barriers, underfloor ventilation). Recommend radon testing and, if necessary, installation of mitigation measures; costs can be a negotiation point. Confirm with the lender that mortgage terms are unaffected. Insurance is not typically used for radon; practical mitigation is the solution.

Worked Example 1.6

A lender’s valuation highlights potential flood risk. The flood search confirms medium risk of surface water flooding and indicates that standard insurance is likely to be available but with higher premiums.

Answer:
Report to the lender and buyer, confirm insurability and premium levels with an insurance broker, and consider a specialist flood risk assessment to identify mitigation measures. Advise on likely ongoing costs and possible impact on resale. The buyer may negotiate a price adjustment to reflect increased insurance costs or choose to proceed with flood mitigation recommendations.

Revision Tip

Remember that environmental liability under Part 2A EPA 1990 is distinct from planning controls related to contamination. Planning permission for development might include conditions requiring site investigation and remediation, but this does not remove the existing statutory liability under the EPA.

Key Point Checklist

This article has covered the following key knowledge points:

• Environmental searches are an essential part of pre-contract due diligence to identify potential contamination risks and liabilities.
• The primary legislation is the Environmental Protection Act 1990, Part 2A, which defines contaminated land and establishes liability for remediation.
• Liability primarily falls on the “polluter” (Class A persons), but can pass to the current owner/occupier (Class B persons) if the polluter cannot be found.
• Local authorities enforce Part 2A except for special sites, where the Environment Agency acts as the enforcing authority.
• Desktop environmental reports provide an initial risk assessment based on historical and database information and may flag the need for Phase I or Phase II investigations.
• Local search replies (CON29/CON29O) can reveal contaminated land determinations, remediation notices, and environmental/pollution notices; these must be read with environmental reports.
• Specific searches (e.g. Flood, Mining, Radon) and more detailed site investigations (Phase I/II surveys) may be required depending on the property and initial findings.
• Search results must be reported to the buyer and lender and may impact transaction terms, price, or require remediation or insurance. Lenders may impose conditions or decline to lend on adverse findings.
• Contractual tools (warranties, conditions precedent, retentions/escrow) can manage remediation and allocate risk; environmental indemnity insurance can address residual unknown risks.
• Flood risk and radon may not engage Part 2A but remain material to suitability, insurability, and valuation; ensure appropriate searches and mitigation strategies are considered.

Key Terms and Concepts

• Contaminated Land
• Polluter Pays Principle
• Remediation Notice
• Desktop Environmental Report
• Phase I Environmental Site Assessment
• Phase II Intrusive Site Investigation
• Special Site
• Flood Search
• Radon
• Environmental Indemnity Insurance