Recently a situation has illuminated the vital importance of an agent and/or solicitor acting for a seller to ask appropriate questions and do appropriate searches of a property before preparing sale contracts.
A situation has occured where by the developer of a multi-storey commercial building has discovered that the land was on the Contaminated Lands Register and as a result they have had to issue notices to buyers informing them of this.
The Environmental Protection Act states that unless such a notice is given before contract, a buyer can terminate the contract at any time up to settlement.
In this situation, there are several floors in the building each worth a significant amount.
Buyers that have received notice of contamination of the land may now choose to use the late notification as a reason for termination thus threatening the commercial viability of the project.
The solicitors or agent who put together the contract documents should have searched and discovered that the land was on the Contaminated Lands Register and given notices to all buyers before they signed the Contract.
If the buyers are successful in terminating the contract we suspect the developer will be making a claim for negligence against their original solicitors or agent which will be for a significant sum of money.
It is imperative that agents and/or lawyers adequately interrogate sellers about the nature of the property being sold before the contract is formed and do necessary searches to ensure that there are no matters which should be disclosed. These searches should at least include the following:
1. TITLE
2. REGISTERED PLAN
3. EPA (ContaminatedLand register)
Other searches might be appropriate depending on instructions taken from the seller at that time.
It is also imperative that responses to the questions posed to clients regarding the nature of the property being sold be recorded.
Jon McCarthy
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