A recent decision out of Newfoundland should remind prospective
purchasers of real estate NOT to count on Environmental Site
Assessments (ESAs) or other environmental reports commissioned by
the seller, unless they acquire a specific contractual right to
rely on that report, e.g. through a reliance letter. Real estate
lawyers, take note, please.
In Community Mental Health Initiative Inc. v. Summit Lounge
Ltd., 2014
CanLII 63978 (NL SCTD), the plaintiff, CMHI, entered into a
purchase agreement to buy property from the defendant, Summit. The
purchase agreement required Summit to provide CMHI with a Phase I
Environmental Site Assessment in order to demonstrate that the
property was free from contamination. The vendor hired a well known
environmental consultant, Stantec, to conduct the ESA. Stantec issued a
report concluding there were no grounds for concern. The seller
provided the ESA to the buyer who then completed the real estate
transaction. The buyer subsequently
