The environmental Liabilities in the valuation of real estate portfolios in Europe

Most if not all EU countries have adopted a body of laws aimed at protecting the subsoil (soil and groundwater) from contamination, i.e. from the site-originated presence of chemical substances that can cause harm to public health. Such legislation usually pairs up with another set of laws dealing with health-endangering substances associated not to subsoil but to the actual buildings, typically asbestos. The basic concept of such laws is the responsibility for remediation, i.e. the complex of activities aimed at defining a state of contamination and returning the site to its original or at least to a sustainable state. Such responsibility is seen by national laws within the EU as resting with the party having caused the contamination itself. However, in practice, it is never immediate and often impossible to trace back the causes of a contamination associated to site usage throughout the years and not to a contingent accident. In essence one can say that anybody acquiring an asset is also acquiring any contamination associated to that asset and is taking over the responsibility and cost of remediation in front of the law.