Banking and finance—environmental risk
Produced in partnership with Groundsure

The following Environment practice note produced in partnership with Groundsure provides comprehensive and up to date legal information covering:

  • Banking and finance—environmental risk
  • Lenders' risk exposure
  • Lender liability
  • Contaminated land
  • Flood risk
  • Japanese knotweed
  • Energy performance schemes
  • Asbestos
  • The Equator Principles
  • Managing environmental risk

Banking and finance—environmental risk

Lenders' risk exposure

Lenders are increasingly concerned with environmental risk in their day to day secured lending businesses. All major UK banks now have to make, to some greater or lesser degree, a formal consideration of environmental risk within their secured lending credit risk assessment process, although more generally this relates to commercial rather than residential property. This process can form part of the solicitor / conveyancer’s report on title but increasingly lenders are adopting formal internal procedures that may also involve their panel Chartered Surveyors to address environmental risk as part of the valuation process.

The Law Society provides guidance to its members on ground contamination and flood risks including steps to address such risks.

For more information on the Law Society's guidance, see the following Practice Notes:

  1. Law Society practice note on contaminated land

  2. Flooding—Law Society practice note on flood risk

Similarly the RICS (Royal Institution of Chartered Surveyors) provides its members with guidance with regards to advising clients on environmental risk and its impact on value, where instructed to do so by the lender client.

Lender liability

Lenders' risk exposure can be regarded in the following categories:

  1. direct risk exposure—where a lender may have the potential to assume direct legal and financial responsibility for environmental risks associated with a property, eg a lender that takes possession of a waste management site that has

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