Can a buyer require a clean environmental report to close?

A buyer is free to ask that closing depend on an environmental report, and the seller is free to agree or counter. The word “clean” means what the agreement says it means, so define it. Provinces such as those below regulate contaminated sites under their own laws, so what a report must contain, and who may act on it, varies by where the property is. The examples below come from three provinces and are not a full picture.

Provinces set the assessment standard

British Columbia’s government says the Environmental Management Act, the Contaminated Sites Regulation and associated protocols lay out the framework for identifying, investigating and remediating contaminated sites. New Brunswick’s environment department publishes Protocol-400 for environmental site assessments and says the responsible party must engage a site professional to plan, implement and oversee an appropriate assessment. A report prepared to one province’s protocol is not automatically a report prepared to another’s.

Why owners worry about responsibility

Alberta’s Environmental Protection and Enhancement Act defines “person responsible for the contaminated site” for its release-of-substances Part. The definition includes the owner of the site and any previous owner who owned it when the substance was there, and it lists successors and assignees of some of those persons. The same definition excludes a person who investigates or tests a parcel to determine its environmental condition, unless the investigation or test releases a new or additional substance that may cause, is causing or has caused an adverse effect, or aggravates the adverse effect of a release. Because a current owner falls within that definition, a buyer has reason to know a site’s condition before it becomes the owner.

Writing the condition so it can be met

Ask the buyer to say what “clean” means in the agreement: which standard, who commissions the report, who pays, who may rely on it, and what happens if it finds something. Decide in advance whether a finding lets the buyer leave, lets you remedy it, or leads to a price discussion. If the business holds environmental approvals, check whether they move with a sale. Ontario’s ministry says an Environmental Compliance Approval holder must notify the ministry when the name, address or ownership of the approval changes, and gives a list of documents for the change. See what environmental checks you need before buying a business for the buyer’s side.