MORTGAGEES in possession of land affected by the newly minted Contaminated Sites Act could face a major impact from the new law.
In terms of both lending due diligence and also enforcement protocols, lenders will need to understand the legislation and its potential impacts and should ensure contaminated or potentially contaminated land has been identified.
Lenders will also need to implement strategies to ensure reporting and disclosure obligations are met if the mortgagee takes possession of the contaminated land.
Under the act, a mortgagee in possession is included in the definition of ‘owner’.
This means the mortgagee will be subject to the same obligations as if it were the legal owners and could include things such as reporting a contaminated site or remediating the land.
A mortgagee in possession can avoid the responsibility for remediation if, within 45 days of entering into possession, it makes a formal request for the remediation to be transferred to the State but this can only be done by losing the value of its security over the land.
If a mortgagee in possession wishes to sell land and either knows or suspects the site is contaminated, it must disclose that information to the buyer or face significant penalties under the act as well as any claim for damages by the purchaser.
Natalie Wigg, associate – 9288 6842
Dean Hely, partner – 9288 6772
Phillips Fox