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Housing associations need to be aware of their potential liability for land that may contain contamination. The contaminated land regime sets out who is liable for the remediation of polluted areas, but it operates retrospectively so that landowners may be responsible for past contamination, even if they did not cause it themselves.

There are two guiding principles to the regime. First, sites should be remediated to make them "suitable for use". This can mean that a change of use can make a site become, in legal terms, contaminated.

Second, the "polluter pays" principle is applied, meaning those responsible for the contamination may well be responsible for cleaning it up. Unfortunately for many, the definition of "polluter" has been extended. There are two levels of liability. The primary responsibility lies with the polluter (defined as someone who "caused" or "knowingly permitted" contamination).

To "knowingly permit" requires some knowledge of the contamination, the power to do something about it and a subsequent failure to take any action. "Acquiring knowledge" of contamination can mean as little as buying a site and being given the opportunity to carry out the searches and surveys. If the polluter cannot be found, the liability may attach to the current owner. Potentially, an innocent owner could be responsible for cleaning up a site.

It should be remembered that liability for land contamination is wider than the contaminated land regime. Land contamination can cause water pollution, a criminal offence, and civil liability can result from nuisance, trespass or other forms of civil action.

Therefore, a knowledge of your potential liability is vital before buying land. When negotiating, registered social landlords should consider who is going to be responsible (that is, pay) for the remediation.

In recognition of this duty, the Law Society has issued a "warning card" that requires solicitors to consider whether contamination is an issue. Although the guidance is not a requirement, it can be taken into account in assessing negligence on the part of a solicitor. Solicitors need to:

• advise about potential liabilities
  
• make enquiries of a seller
  
• make enquiries of regulators
  
• undertake independent site history investigation
  
• consider the need for a full site investigation by environmental consultants
  
• consider contractual or other mechanisms of protection.

Change of use can mean a site becomes contaminated in the eyes of the law and the liability may attach to the owner

While all of the above may not be appropriate in all transactions, the solicitor should consider, with the RSL, the most appropriate way of dealing with each transaction. When giving advice on potential contamination, it is essential that the solicitor not only understands the needs of its client but can also call on environmental law experts.

The present awareness of environmental law has not always been the case and, with the regime being retrospective, many RSLs will find that sites they purchased or developed years ago may well be storing liability for the future.

As part of a risk-management process, RSLs should look at their portfolio to ascertain whether they have any liability and consider how best to manage that risk. This does not have to be a painful exercise and will ensure that any future liability the RSL has is properly managed.

Far too often RSLs appoint environmental consultants in a way that does not provide them with adequate protection. The brief given to the consultant should always be clear and their standard terms and conditions should not be relied upon. A proper form of appointment should always be used. This will contain terms and conditions that are reasonable for both parties and will adequately protect the RSL. It will also provide for collateral warranties to be available to funders and any future owners of the land.

RSLs should be reviewing their procedures to ensure potential liabilities are minimised. Consideration should be given by those owning potentially contaminated sites as to what form of risk management is appropriate. Potentially, environmental insurance is available, although there is considerable difference between the various companies that offer such insurance and the wording of each individual policy should be separately negotiated. Needless to say, insurers attempt to limit their own liability.