Buying or selling a property? Know the asbestos liability first.
Asbestos in a building directly affects its valuation, insurance, and legal liability. Buyers need to know what they are acquiring; sellers need to disclose what they have.
An asbestos survey as part of due diligence identifies the type, quantity, and condition of asbestos-containing materials. This information determines whether removal is needed, what it will cost, and how it affects the transaction.
In many jurisdictions, sellers are legally required to provide asbestos information. For buyers, discovering asbestos after closing can mean unexpected costs running into tens or hundreds of thousands.
The Problem
Commercial properties, retail units, shopping centres, and mixed-use buildings, constructed before 2000 commonly contain asbestos in ceiling tiles, fire protection systems, column cladding, and mechanical risers. Buyers must quantify this liability before completing the transaction.
Failure to perform due diligence exposes the buyer to unexpected removal costs, regulatory non-compliance, and potential legal claims from tenants or workers who may be exposed during future refurbishment.
What You Need
Frequently Asked Questions
What asbestos checks are needed for commercial property transactions?
Commercial property transactions should include a management asbestos survey, review of the asbestos register and management plan, assessment of removal costs, and verification of compliance with building regulations. Environmental liability insurance may also be advisable.
Is an asbestos survey required when buying a property?
While requirements vary by country, asbestos surveys are increasingly required or strongly recommended as part of property due diligence. In many jurisdictions, sellers must disclose known asbestos presence. Buyers should request a survey for any pre-2000 building.
Does asbestos affect property value?
Yes. The presence of asbestos can reduce property value due to the cost of future management or removal. However, a well-documented asbestos management plan can mitigate the impact. Undisclosed asbestos discovered post-purchase can lead to legal disputes.
Who pays for asbestos removal when buying a property?
This is typically negotiated between buyer and seller. The cost may be reflected in a reduced purchase price, or the seller may arrange removal before completion. Legal advice should be sought to clarify liability.
Can you sell a property that contains asbestos?
Yes, but the seller has a legal obligation to disclose known asbestos-containing materials. An asbestos survey report and management plan should be provided to the buyer. Failure to disclose can constitute a latent defect.
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