The Asbestos Was in the Garden. Why Was It Only Found When the House Was Sold?

A homeowner tries to sell, only to discover that asbestos in the garden may have made the property difficult to mortgage and exceptionally expensive to remediate. The immediate question is how to resolve the problem. The equally important question is why it was not identified, investigated or explained when the property was bought.

Asbestos is usually associated with roof sheets, textured coatings, insulation and other parts of a building. When asbestos-containing material is buried in the garden or mixed with the soil, however, the issue takes on a different dimension.

It may become a contaminated land problem, an environmental search problem, a valuation problem and a mortgageability problem. It can also become a classic example of an issue that remains hidden until the owner tries to sell or remortgage.

Does asbestos in a garden make a property unsellable?

The word “unsellable” is powerful, but it is not always precise. A property affected by asbestos contamination may still be capable of being sold. The practical difficulty is that the available market could become significantly smaller.

The property might be:

• unacceptable to particular mortgage lenders;
• acceptable only after further environmental investigation;
• subject to a mortgage retention or a requirement for remediation;
• unattractive to buyers concerned about health risks and future costs;
• saleable only at a substantially reduced price; or
• of interest principally to cash purchasers willing to assume the risk.

The precise position will depend on what material has been discovered, where it is located, whether it has contaminated the surrounding soil, the likelihood of disturbance and the estimated cost of investigation and remediation.

Asbestos cement fragments lying close to the surface may present a different risk from friable asbestos material distributed across a large area. The description “asbestos in the garden” is therefore the beginning of the investigation, not its conclusion.

Why an ordinary environmental search may not reveal the problem

A standard residential environmental search is normally a desktop assessment. It considers databases and records concerning matters such as historic land use, landfill, potentially contaminative activities and regulatory information.

It does not ordinarily involve somebody visiting the garden, excavating the soil or testing samples for asbestos fibres.

A search may reveal that the property is close to a former industrial site, landfill or another potentially contaminative use. It might recommend further action or additional investigation. But a clear desktop result does not necessarily prove that the garden is physically free from asbestos-containing material.

This distinction is important when considering what happened during the original purchase. The mere fact that asbestos was later discovered does not prove that the conveyancer or search provider should have found it.

The proper investigation should instead ask:

• What information was available at the time?
• Did the environmental search identify a possible risk?
• Was any further investigation recommended?
• What did the seller disclose?
• Did the surveyor identify suspicious materials or evidence of previous structures?
• Were relevant enquiries raised and answered?
• What was explained to the buyer before exchange?

How could asbestos have come to be buried in a residential garden?

There are several possible explanations. Materials from an old garage, shed, outbuilding or roof may have been broken up and buried rather than properly removed. Building waste might have been deposited during earlier construction or renovation work. The property may also have formed part of land previously used for industrial or commercial purposes.

None of these possibilities should be assumed without evidence. The history of the property, planning records, old maps, environmental information, earlier survey reports and physical investigation may all be relevant.

If an outbuilding containing asbestos cement roofing was demolished before the property was sold, for example, the questions may include who carried out the work, how the material was disposed of and what the seller knew about it.

What should the buyer have been told?

The conveyancer is not an environmental scientist and does not conduct a physical inspection of the garden. The surveyor, search provider and conveyancer perform different functions.

Nevertheless, the conveyancer should consider the information that enters the transaction and advise on its legal and practical implications. If a search recommends further action, a seller discloses possible contamination or a survey identifies suspicious material, it may not be sufficient simply to attach the document to a Report on Title without explaining its significance.

The buyer may need to understand:

• the limitations of the environmental search;
• whether specialist investigation has been recommended;
• the possible cost and disruption of remediation;
• whether proposed extensions or landscaping could disturb contaminated soil;
• whether the mortgage lender must be informed;
• whether insurance is available and what it would actually cover; and
• how the issue might affect a future sale or remortgage.

A property may be acceptable to the buyer’s current lender while remaining unattractive to other lenders. That distinction matters because mortgageability is an important component of practical marketability.

The current lender’s decision is not the whole market

Suppose a lender agrees to proceed despite an environmental concern. That does not necessarily mean the issue has ceased to matter.

The buyer may eventually sell to somebody using a different lender with more restrictive requirements. A future valuation might recommend investigation. The physical condition of the material may deteriorate, or planned construction work may make disturbance unavoidable.

Advice confined to the question “Will this lender release the mortgage advance?” risks overlooking the buyer’s wider position. The report should also address ownership, occupation, future works and resale.

This is why a conveyancer should not view the property exclusively through the requirements of the lender financing the immediate purchase. The client is buying a long-term asset, not merely completing the current mortgage transaction.

What did the original mortgage lender require?

If asbestos contamination becomes a problem years after completion, the requirements of the original mortgage lender may form part of the investigation.

The relevant question is not necessarily what that lender says today. Mortgage lender requirements change. A lender may alter its instructions concerning environmental searches, contaminated land reports, specialist evidence, valuation concerns and matters that must be reported before completion.

The Lexsure Lender Archive contaminated land records allow the lender and relevant transaction date to be selected. This can help establish the lender wording recorded at the time rather than applying the current UK Finance Mortgage Lenders’ Handbook retrospectively.

The historic lender record might assist in determining:

• whether an adverse or qualified environmental search had to be reported;
• whether further investigation or specialist evidence was required;
• whether the lender relied upon the valuer’s assessment;
• whether the lender’s consent was required before proceeding;
• whether a particular response or solution was permitted; and
• how other mortgage lenders treated the same issue at that time.

The lender’s instructions may not expressly use the words “asbestos in the garden”. Relevant obligations may instead appear under contaminated land, environmental reports, valuation, marketability or the general obligation to report an adverse matter.

Equally, the absence of express asbestos wording does not prove that the lender accepted the risk. The complete Part 1 and Part 2 instructions, mortgage offer, valuation and transaction correspondence must be considered together.

What should an owner check from the original purchase?

An owner who discovers asbestos contamination during a later sale or remortgage should try to recover the complete purchase file. Relevant documents may include:

• the environmental search and all accompanying reports;
• the seller’s property information form;
• pre-contract enquiries and replies;
• the survey or valuation report;
• planning records relating to demolished buildings or previous development;
• the conveyancer’s Report on Title;
• correspondence discussing environmental concerns;
• any insurance policy obtained at the time;
• the mortgage offer and special conditions; and
• the mortgage lender requirements applying on the relevant date.

The question is not simply whether the word “asbestos” appears somewhere in the file. It is whether the information available created a warning that required further investigation, reporting or advice.

Could contaminated land indemnity insurance help?

In an appropriate transaction, the parties may consider contaminated land indemnity insurance. The seller may agree to meet the premium as part of the arrangements for allowing the sale to proceed.

The proposed policy must be reviewed against the actual contamination concern and the requirements of the buyer’s mortgage lender. The fact that a policy is available does not mean it provides a complete solution.

For an example of wording designed to explain this arrangement to a purchaser, see the Lexsure Report on Title paragraph dealing with a contaminated land indemnity policy where the seller bears the cost.

An indemnity policy should not be presented as evidence that the garden is uncontaminated or safe. It ordinarily addresses defined financial consequences under the policy wording. It does not physically remove asbestos, test the soil, pay for every form of remediation or guarantee that a future purchaser and mortgage lender will accept the property.

The buyer should be told:

• who is insured under the policy;
• which risk triggers cover;
• the limit of indemnity;
• what losses and remediation costs are excluded;
• whether the policy protects future owners and mortgage lenders;
• whether contact with an authority or third party could invalidate the cover; and
• whether planned building or landscaping work would affect the policy.

Insurance may address a defined legal or financial exposure. It should not be confused with environmental investigation, a health assessment or physical remediation.

What should happen once asbestos is discovered?

The owner should avoid disturbing or attempting to remove suspected asbestos material. A suitably qualified environmental or asbestos professional may need to identify the material, assess its condition and determine the extent of any contamination.

The conveyancer handling the current sale or remortgage should establish precisely what the buyer and proposed lender require. The owner should also retain laboratory reports, remediation proposals, contractor documentation, waste records and any clearance evidence produced.

Care is needed before approaching public authorities or taking action that might affect the availability of indemnity insurance. The proposed sequence of investigation, notification, insurance and remediation should be considered before potentially irreversible steps are taken.

Our earlier guide on what to do when contaminated land concerns stall a transaction considers the immediate practical steps for owners, buyers and conveyancers.

The real lesson is about discovering risk too late

Asbestos in a garden demonstrates the difference between completing a purchase and understanding the property being acquired.

No conveyancing process can guarantee the discovery of material concealed beneath the ground. But where the searches, seller’s replies, survey or history of the site provide a warning, the buyer should receive advice that connects the information to the possible cost, mortgageability and future saleability of the property.

When the issue only becomes apparent years later, the investigation should return to the original evidence. What was known? What should reasonably have been investigated? What did the lender require? Most importantly, what was the buyer told before becoming committed to the purchase?

This article is for general information only and is not legal, environmental or health advice. Suspected asbestos should not be disturbed. Appropriate professional advice should be obtained from a qualified asbestos or environmental specialist. Historical lender requirements must be considered with the complete mortgage instructions and the individual transaction file.