Environmental Liability: Who Pays for Cleanup?

You bought a fixer upper next to an abandoned lot, and now you’re curious about your environmental liability for spills, leaks, or contamination.

Innocent party or not, you could be liable for contaminated property cleanup for commercial, industrial, agricultural, recreational, or other land you own, lease, or buy in Ontario.

The bill for satisfying Ontario’s Environmental Protection Act (EPA) can be astounding.

Realtors’ duty to home sellers in Ontario. 

Property Owners’ Liability for Environmental Damage

Liability for environmental damage means is that you, and possibly previous owners or companies, are responsible for any object or substance that is somewhere it doesn’t belong: 

  • oil leaks that contaminate groundwater
  • heavy metals in soil at a former plant
  • herbicides from a hobby farm
  • asbestos in ceiling tiles, insulation, or wallboard
  • black mould in an attic
  • lead paint you find under a heritage home staircase
  • and more.

Removing, mitigating, or containing the threat may not be an easy task. 

Who is liable for defects found after a home inspection. 

Who’s Responsible for Environmental Liability Under the EPA?

Owning or controlling contaminated land makes you liable for cleaning it up. 

It works like this:

  1. If you spill, leak, or otherwise release a polluting substance on your property, the environmental liability to report, clean up, and pay for remediation is yours. See Reporting Contaminated Property
  2. If the property was contaminated when you bought it and you can prove it, the environmental liability for naturally occurring toxins, spilled substance, or industrial pollutants may be the previous owner’s. You are liable for reporting the spill and cleaning it up if the former owner doesn’t. Telling buyers a property is contaminated is a legal obligation, and you can bill or sue the former owner for cleanup costs and  expenses like legal fees.
  3. If a neighbour or company owns or controls the contaminant, they are liable for cleanup and disposal, but you are ultimately responsible for ensuring it happens. The Ministry of Environment, Conservation and Parks may arrange the cleanup, or you can. You must pay for the cleanup if your neighbour or the company owner doesn’t, but you can pursue them in court for your costs and legal fees.

Options when a home inspection condition finds deficiencies

Protecting Your Property Buyer Rights

You can protect yourself from potential environmental liability by hiring an Ontario lawyer to search title to a property you want to buy. Your lawyer should tell you about any red flags that could affect the sale or price. Municipal and provincial records, and historical documents in libraries can also reveal a potential environmental liability. Search Ontario records of site condition

Getting an Environmental Site Assessment

ESAs, or environmental site assessments, are the next step up when a title search exposes potential concerns. A Phase 1 ESA can reveal potential pollutants through a visual or historical inspection, photos, or document search ($3,000 to $5,000). Phase 2 ESAS ($7,000 to $60,000) include soil, groundwater, or structure samples, and are mandatory if site use changes, say from agricultural land for housing. Phase 3 is an actual site remediation plan, with a report on actions you took to restore the site. Hire an environmental consultant if you need or want an ESA.   

Reporting Contaminated Property

Ignoring contamination is not an option.

The onus is on you to report spills to the local municipality and the provincial Spills Action Centre, https://www.ontario.ca/page/report-pollution-and-spills# because if you don’t, someone else could. Report pollution online, or call 1-866-MOE-TIPS. https://report-pollution.ene.gov.on.ca/ 

Taking care of your environmental liability can protect you from lawsuits from future buyers, neighboring property owners, or environmental activists. Read Ontario’s Environmental Bill of Rights for more on how you could be forced to take action based on a complaint. 

Insuring Your Environmental Liability Risks

Insurance can help with contaminated property cleanup costs for commercial property owners. A private environmental liability policy may cover:

  • historical coverage for past owners’ actions
  • bodily injury from exposure
  • property damage from accidental contamination
  • contaminated property cleanup
  • or legal defence costs if government or a private party sues you.

Most commercial insurers can give you a quote.

Confused About the ‘3 Environmental Laws’?

You don’t need to be. The “3 environmental laws” (the Clean Air Act, Clean Water Act, and Toxic Substances Control Act) are U.S. regulations for contaminated property cleanup. What you have to be concerned about is your environmental liability under the EPA.

Why You Need a Real Estate Lawyer

Axess Law’s professional real estate lawyers can include an environmental assessment condition in the agreement of purchase and sale when you’re concerned about your potential liabilities for a property’s current condition. 

Drafting your agreement of purchase and sale

Protect yourself from inadvertently buying Ontario property used for industrial purposes, or sited near naturally occurring hazards. An ESA gives you the ability to cancel without losing your good faith deposit if the circumstances are not absolutely acceptable to you. 

Before you close a home or property sale near an existing or decommissioned gas station, industrial warehouse, railyard, or abandoned utility site, ask Axess Law about your buyer’s right to cancel.

House closing process for sellers in Ontario.  

ESA not perfect, but still interested in buying? Your Axess Law real estate lawyer negotiates with the seller’s legal representative to see if a price reduction is possible, or the seller will absorb contaminated property cleanup bills.  

Once your environmental liabilities are resolved, we search the title to the property for obstacles like financial or legal claims against it. Your new property is transferred into your name, and if borrowing is required to finance the sale, we liaise with your lender to finalize the legal documents. 

Most asked questions for real estate lawyers in Ontario.  

Affordable Real Estate Lawyers, Anywhere You Are 

Access lawyers for less in Greater Toronto Area, Ottawa, or anywhere in Ontario  when you buy, sell, or transfer property. Axess Law’s flat fee real estate lawyers are affordable, and our rates are all inclusive (excluding taxes, disbursements, and third-party charges). Axess Law offers you only the legal services you absolutely need. Your final invoice includes no surprises or hidden charges. Your itemized statement of adjustments is explained when we deliver it, and we answer any questions you have about it. 

Your Ontario real estate lawyer’s role

Easy Online or Phone Bookings

Book legal appointments quickly and conveniently by dialing our 647-479-0118 lawyer line in Greater Toronto Area, or toll-free to 1-877-402-4207. We have offices near you in the GTA and Ottawa, or remote real estate lawyers available by virtual video conference 7 days a week. You can schedule your own appointments online, with our easy-to-use booking form. If it’s more convenient, drop by any Axess Law location https://axesslaw.com/locations/ to make appointments in person. 

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