Climate risk and environmental liabilities in property

The Law Society’s Practice Note on Climate Risk was heavily criticised in the conveyancing press – why should property lawyers undertake climate searches and warn clients about future climate risks when they are not qualified to advise on physical risks?

As Environment Partner at Irwin Mitchell, I consider the dilemma for law firms: how can we ensure compliance with regulatory guidance and protect clients from environmental liabilities and climate risks when most firms don’t even have an environmental specialist? In this article, I look at the typical red flag environmental issues that arise in transactions and recommend a common-sense approach to secure the best position for clients.

Contaminated Land

When the Contaminated Land Regime (Part 2A EPA 1990) was introduced in 2000, local authorities identified 430,000 potential contaminated sites in England. In 2014, when government funding was first curtailed for Part 2A inspections, only 511 sites had been remediated under the regime.

Property transactions and development projects will regularly encounter contaminated sites and your first line of defence is always an environmental desktop search. Desktop reports highlight “potential liability” under Part 2A (that is, a potential contaminant linkage between historic contamination and receptors like houses and groundwater). However, the risk of “actual liability” (investigation, enforcement action or third-party claims) is usually much lower. 

When you receive a failed desktop report “in need of further assessment”, the quickest solution is usually contaminated land indemnity insurance. Other options include regulatory enquiries or obtaining an environmental liability opinion from an environmental lawyer that funders can rely on.

Landfills

Extra care should be taken with landfills. Groundsure estimates that there are over 20,000 historic landfills in England and Wales. Most of these sites will have had no capping, restoration or licensing controls. That means leachate and gas can migrate and pose risks to human health and groundwater for several decades after tipping has stopped.

A BBC freedom of information request to local authorities in 2025 found that councils had only inspected 1,465 of 13,093 of the highest-risk toxic waste sites.

Always raise additional landfill enquiries, such as dates of tipping, details of landfill operator, type of waste, and status of licence or permit. You should also ask the desktop provider to raise enquiries with the council and Environment Agency, seeking copies of reports, details of monitoring, and any concerns or plans to investigate the site.

PFAS Contamination

A “deal breaker” environmental liability risk could be PFAS contamination – forever chemicals that are difficult to remediate. Many brownfield development projects are now stalling due to Environment Agency requirements for additional testing and more expensive remediation. The government has suggested that there are between 2,900 and 10,200 high-risk PFAS sites.

Extra care is required in any transactions where there could be “presumed” PFAS contamination – such as airports, fire training grounds, landfills, wastewater treatment works, chemical sites, textiles, leather, furniture and carpets, metal plating, automotive, electronics, pesticides, plastics, paints and inks, tanneries, cosmetics and sewage sludge on land.

Desktop searches will not flag PFAS liabilities due to the risk of stigma. However, a developer client or brownfield investor will definitely need to know in advance, so a specialist PFAS desktop search should be sought. Because PFAS can increase remediation costs from thousands to millions, it is vital to obtain environmental lawyer advice on heads of terms, sale contract and availability of insurance.

Asbestos Liabilities

There is a legal presumption that commercial buildings constructed before 2000 contain asbestos. Asbestos is a Russian roulette transactional issue. Just one site with an asbestos dust release incident and missing documentation could leave your client facing regulatory enforcement action, asbestos claims, and remedial obligations.

To manage this risk, always request the asbestos management survey and updated asbestos register and asbestos management plan. If asbestos has been removed, ask for consignment notes and clearance certificates. An indemnity can be added in the contract (for example, covering survey and works after completion). However, it is much better to make the property compliant before completion. Surveys can be completed and documentation updated in under a week, at relatively low cost.

Environmental Permits

Environmental permits should always be treated as red flags. Non-compliance can result in criminal liabilities or capex obligations, and transferring or surrendering a permit can take over a year. If permits aren’t considered at the outset of a transaction, there is a high risk that a deal can abort.

To minimise risks, advise your client on the permit transfer obligations and timescales. Remember that trade effluent consents cannot be transferred, so a new application is required. If a permit cannot be transferred by completion, recommend an operators agreement to satisfy regulators.

Climate Due Diligence

Funders, investors and insurers expect future climate information to be reported. Surveyors only look at the current climate position when assessing property value. With more extreme climate change, the important question for clients is what the future risks will be in five and thirty years.

The Environment Agency estimates that 8 million properties, or one in four, will be at risk of flooding in 2050. The Law Society Practice Note on conveyancing and climate risk seems to have caused some confusion with property lawyers, rather than providing clear guidance.

The best way to help your client and protect your firm is to include a climate search as standard, and then add the appropriate disclaimers in your Report on Title or letter of engagement.

To prevent professional indemnity claims, order a search with climate information included and explain your approach within the engagement letter or Report on Title. Highlight any high-risk issues in the report and direct your client to the report provider or surveyor for further guidance. Add disclaimers to clarify that lawyers are not qualified to advise on physical risks.

Conclusion

The majority of transactions can be adequately managed on the environmental front with these practical steps, using the combination of a good desktop search and the toolkits and environmental precedents from LexisNexis and PLC. Law firms can always call on technical and legal environmental specialists when clients require more detailed due diligence.