Environmental due diligence

Due diligence is the process that allows a prospective buyer, tenant or funder and their professional advisers, to audit the target's affairs or investigate the property and use information obtained as a bargaining tool when negotiating deal terms.

‘Caveat emptor’, meaning ‘let the buyer beware’, is a common law principle meaning the seller is under no duty to disclose material facts to a prospective buyer. See Practice Note: Property—enquiries before contract .

Solicitors acting for the buyer, tenant or funder must therefore make their own searches, enquiries and inspections before entering into a contract, to find out the information it requires about the property or target. See Practice Notes: Property due diligence in corporate transactions and Due diligence—share and asset purchases.

The purpose of environmental due diligence

The purpose of environmental due diligence is to:

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assess the risk of contaminated land liabilities
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investigate other risks associated with land and buildings such as asbestos, fly-tipping, subsidence, Japanese knotweed, storage tanks and energy performance issues
•
identify any material non-compliance issues or threatened proceedings or claims associated with the property or target
•
highlight any capital expenditure

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