Industrial Property and Contamination Risk: Why a Clear Environmental Search May Not Tell the Whole Story

What Was Here Before? 

One of the most useful questions when investigating industrial property is often the simplest: what was here before? Industrial and logistics sites often have long operational histories — previous uses may include manufacturing, engineering, fuel storage, waste handling or other industrial activities — and historic issues do not always disappear simply because a site has changed hands or been redeveloped. 

Historic mapping, planning records, environmental reports and replies to enquiries can all help build a clearer picture of a site's history. In many cases, the legal and commercial risk associated with contamination arises not from the current use of a property, but from historic activities carried out many years earlier. For industrial property owners and investors, understanding a site's history can therefore be just as important as understanding its current condition. 

Why Contamination Matters Legally 

As commercial property solicitors, our role is not to provide technical environmental advice — where contamination issues arise, clients should obtain advice from appropriately qualified environmental consultants. Our role is to advise on the legal and commercial implications of information revealed during due diligence, and to help ensure that any agreed allocation of risk is properly reflected in the transaction documents. 

Under Part IIA of the Environmental Protection Act 1990, certain land can be formally designated as "contaminated land" where statutory criteria are met. The regime is risk-based, and the presence of contamination does not automatically mean land will fall within the statutory definition — a significant contaminant linkage must exist between a contaminant, a pathway and a receptor. In short, contamination and "contaminated land" are not necessarily the same thing, because the statutory regime is concerned with risk and liability rather than simply the existence of contamination. 

Liability May Not Always Rest with the Original Polluter 

The statutory regime distinguishes between those who caused or knowingly permitted contamination, and current owners or occupiers who may, in certain circumstances, become responsible where those original parties cannot be found. The regime is also capable of operating on a strict and retrospective basis, meaning historic contamination can continue to be relevant many years after it originally occurred. 

Whilst formal contaminated land designations remain relatively uncommon, the potential existence of liability is one reason purchasers, lenders and occupiers continue to focus closely on environmental due diligence. Environmental issues can also affect a lender's willingness to finance a transaction, which is another reason it is often scrutinised carefully during acquisitions and refinancings. 

Risk Allocation Is Often as Important as the Risk Itself 

Identifying a potential contamination issue does not necessarily mean a transaction cannot proceed. In many cases, the focus is less on whether contamination exists and more on whether sufficient information has been obtained to assess the risk, and how any identified liability should be dealt with contractually between the parties. 

A purchaser may seek further information or specialist advice before proceeding. Where concerns are identified during due diligence, the parties may instead seek to address them through contractual provisions allocating responsibility for environmental liabilities identified before completion. The appropriate approach depends on the nature of the property, the information revealed during due diligence and the commercial agreement reached between the parties. 

Redevelopment Can Bring Issues Into Sharper Focus 

Contamination concerns often become more significant when redevelopment or refurbishment is proposed. Planning authorities frequently require contamination assessments and remediation measures as part of the planning process for sites with potentially contaminative histories — in practice, contamination is frequently dealt with through the planning process long before the statutory contaminated land regime becomes relevant which may reduce (but not necessarily eliminate) Part IIA risk. As a result, issues with little impact on day-to-day occupation can become increasingly important where redevelopment, refinancing or disposal is being considered. 

Final Thoughts 

Industrial and logistics property continues to attract strong investor and occupier demand, but environmental considerations remain an important part of due diligence. A clear environmental search result is helpful, but it should generally be treated as one piece of the wider due diligence exercise rather than a complete answer in itself. The key questions are often: has enough information been obtained to make an informed commercial decision, is specialist environmental advice required, and does the transaction documentation properly deal with any identified risks? Answering those questions early helps parties make informed decisions, structure transactions appropriately, and avoid unexpected issues later in the process. 

Industrial property and contamination risk: frequently asked questions 

Who is responsible for contaminated land? 

Liability generally rests first with those who caused or knowingly permitted the contamination. Where that party cannot be found, current owners or occupiers may, in certain circumstances, become responsible instead. Because the regime can operate retrospectively, historic contamination can remain legally relevant many years after it occurred. 

Can you sell contaminated land? 

Yes — contaminated land can be sold. The key issues are understanding the nature and extent of the risk, obtaining appropriate specialist advice and agreeing a commercial solution. Depending on the circumstances, the parties may address the issue through further investigations, price adjustment, environmental insurance (subject to cover being available), remediation obligations or specific contractual provisions allocating risk. 

Who is liable for contaminated land when buying commercial property? 

This depends on the circumstances. The statutory regime can impose liability on current owners or occupiers where the original polluter cannot be found, and it can apply retrospectively. This is why environmental due diligence and clear contractual risk allocation are essential parts of any acquisition involving land with an industrial history. 

Do I need an environmental search when buying commercial or industrial property? 

In most cases, yes — an environmental search is a standard and important part of due diligence for industrial or logistics property. However, a clear result should not automatically be treated as confirmation that no risk exists as these searches are “desktop searches” based on paper records and do not involve a physical inspection of the site itself and particularly where a site has a long or mixed industrial history. 

Can contamination liability pass to a new owner or occupier? 

Yes, in certain circumstances. Because the regime can operate on a strict and retrospective basis, a new owner or occupier may become liable where the party who caused or knowingly permitted the contamination cannot be traced. This is one of the key reasons environmental risk is scrutinised closely during acquisitions and refinancing. 

How is contamination risk dealt with in a commercial property contract? 

Where a potential issue is identified during due diligence, it is typically addressed through the transaction documents rather than treated as a reason to abandon the deal — commonly through a specific allocation of responsibility for liabilities identified before completion. Getting this drafting right is often as important as the environmental findings themselves. 

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Commercial Property law advice 

Our Commercial Property team advises investors, landlords and occupiers on industrial and logistics property transactions, including acquisitions, disposals, lettings, due diligence and risk allocation, across London and the south-east. To discuss your circumstances, call 020 8858 6971 or email commercial@grantsaw.co.uk. 

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Disclaimer 

This article is for general information only and is not legal advice. Laws and guidance change and outcomes depend on facts. If you need advice on your situation, please contact us. Grant Saw Solicitors LLP is authorised and regulated by the Solicitors Regulation Authority. 

Last updated 19 August 2026