Standard 9: Ensuring Sound Transactions
The land trust works diligently to see that every land and conservation agreement transaction is legally, ethically and technically sound.
Background
A land trust usually intends to protect the property it conserves in perpetuity. To help secure the perpetual conservation of land, its transactions must hold up over time and withstand challenges. Sound transactions rely on the land trust performing “due diligence” in its transaction steps. Land trust representatives need not be lawyers, but they must have good legal advice, and they should familiarize themselves with basic principles of real estate and tax law. The land trust should draw a landowner’s attention to issues that must be addressed as the transaction proceeds. However, a land trust should not represent itself as giving specific legal or financial advice; a landowner’s own advisors should do that. A land trust may have to call on other financial and technical experts in order to complete the transaction. Carefully documenting the steps a land trust takes in performing its due diligence can help secure the perpetual conservation of the property.
Relevant Law
- Property Law Act, RSBC 1996, c. 377, s. 35.
- Land Title Act, RSBC 1996, c. 250, s. 218-223.
- Canada Revenue Agency policy interpretation of Income Tax Act, SC 1985, c. I; see:
- Environmental Management Act, SBC 2003, c. 53, s. 40
- Contaminated Sites Regulation, BC Reg. 375/96, as am., s. 3.
- Land Title Act, RSBC 1996, c. 250, Parts 10 and 10.1
- Canada Revenue Agency policy interpretation of Income Tax Act, SC 1985, c. I;
see Income Tax Technical News No. 26 at:
- Taxation (Rural Area) Act, RSBC 1996, c. 447.
- School Act, RSBC 1996, c. 412.
- Police Act, RSBC 1996, c. 367.
- Property Transfer Tax Act, RSBC 1996, c. 378.
- Social Service Tax Act, RSBC 1996, c. 431.
PRACTICE
C. Environmental Due Diligence for Hazardous Materials
The land trust takes steps, as appropriate to the project, before the land or conservation agreement transaction is, complete, to identify and document whether there are hazardous or toxic materials on or near the property that could create future liabilities for the land trust.
Background
Hazardous and toxic substances may pose serious environmental threats if improperly stored or managed. Contamination from these substances can also pose serious economic threats if it occurs on land trust property. Legislation on this topic varies between provinces, however, a land trust that owns or was a previous owner of a property contaminated by hazardous or toxic materials may be held liable for all costs associated with the contamination, including the cost of cleaning up the site. It may not matter who initially caused the problem or if the property was donated to the land trust. Preventing the acquisition of contaminated property is clearly preferable to discovering a problem later. A land trust should complete a Phase I Environmental Survey for every property it considers acquiring, whether by purchase or donation. Many land trusts also conduct preliminary evaluations for conservation agreement acquisitions, although the law’s applicability to conservation agreement holders is unclear. This is a rapidly changing area, and there is no single answer appropriate to the question of what constitutes an adequate environmental assessment or due diligence. Each land trust should establish and follow procedures for investigating contamination on potential projects in consultation with a knowledgeable lawyer.
Assessment Questions
BC Assessment Questions
- Does the land trust complete a Phase 1 Environmental Assessment for properties where contamination is suspected or likely?
- Does the land trust have policies and procedures in place to investigate hazardous materials on properties?
- Does the land trust consider hazardous materials as part of their physical site assessment process?
- Does the land trust review the history of the property prior to acquisition to determine the potential risk of contamination?
- Does the land trust document their evaluation for hazardous materials, including their rationale for proceeding with the acquisition of a property?
- When warranted, does the land trust proceed with a Phase 2 Environmental Assessment for hazardous materials?
CLTA Assessment Questions
- Does the land trust have a written policy or procedure on evaluating properties for hazardous materials?
- Does the land trust check public sources of information to determine if the project contains or is near a known hazardous waste site?
