We strongly encourage all of our real estate ‘purchaser’ clients to complete a thorough pre-purchase due diligence process of the property they are interested in buying. By spending a relatively modest amount of time and money investigating all aspects of the property, our clients can ensure they are making a sound investment.
As part of the due diligence process purchasers will generally want to look at the LIM report, obtain a Builders report, and review all aspects of title and Body Corporate records - if the property is a unit title. In addition, we recommend that our clients also obtain Drainage and Toxicology reports.
With the prevalence of methamphetamine production and use in New Zealand, we suggest our clients take a cautious approach, especially if the property has previously been used as a rental. This is because often methamphetamine producers will rent properties on a short term basis, moving regularly, to avoid detection by the landlord and/or police.
It is important to be aware however that the health risk associated with a meth contaminated property is higher if the property was used to manufacture methamphetamine. Dr Leo Schep, a toxicologist at the National Poisons Centre, at the University of Otago, believes that "people living in a laboratory environment risk suffering adverse cardiovascular, respiratory and dermal effects following the exposure to organic solvents, acids, alkalis and other chemicals. However, people living in a house where previous tenants had smoked methamphetamine, and there is some evidence of low concentrations on surfaces, have minimal risks of toxicity."
Accordingly, in June 2017 Standards New Zealand released a new standard for testing purposes (NZS 8510:2017). The new standards are 1.5 micrograms per 100 square centimetres for bedrooms, living areas, kitchens, sheds or garages. The previous Ministry of Health guidelines were 0.5 micrograms. The standard will be used by methamphetamine testing and decontamination companies when conducting testing of properties and reporting health risks to clients.
Toxicology reports are not limited to methamphetamine testing; they can and should also include testing for other toxic substances such as asbestos. Most tests are not invasive and are conducted by way of swab testing.
In a worst case scenario, the consequences of purchasing a meth or asbestos contaminated property could be disastrous financially, if the contamination levels are so high that the only option is to demolish and rebuild. To limit the risk for a prospective purchaser, we recommend a comprehensive Due Diligence condition is included in the Sale and Purchase Agreement for the benefit of the purchaser. The condition allows the purchaser to cancel the agreement if they discover contamination or any other defect.
Finally, the risks associated with contamination should concern landlords also, who should be aware that they could be failing their obligations under the Residential Tenancies Act 1986. If a landlord knowingly rents a contaminated property to an unsuspecting tenant then the landlord will be in breach of its obligation to provide a “reasonable state of cleanliness” (section 45).