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How real estate agents and lawyers can work together to address climate risks in property transactions


Climate change is becoming a key consideration for property buyers, with climate-related risks such as extreme weather and rising insurance costs taking centre stage in purchasing decisions. Attwood Marshall Lawyers Property and Commercial Lawyer Mieke Elzer delves into the changing dynamics of climate risk and what role agents and property lawyers play.

Did you know that property lawyers have a duty of care to advise their clients about climate change risks? The Law Council published its Climate Change Policy in December 2021, telling lawyers they must “advise clients on the legal implications of climate change in accordance with professional standards and legal ethics.”

Climate change and its associated risks can also significantly impact real estate agents, buyers, and sellers, affecting the value of homes, neighbourhoods, and financial investments.

Climate related challenges in real property transactions include the potential for depreciation of property values, risk of damage to properties from coastal erosion, flooding, bushfire, and increased insurance premiums for homes in risk effected areas.  

Research conducted by the Actuaries Institute  highlights that already “nearly one in eight households now face home insurance affordability stress.” The research found that “median home insurance premiums rose 28 per cent to $1,894 in the year to March 31, with the highest risk properties, such as those in flood-prone areas, up by 50 per cent”.

Real estate agents play a vital role in educating clients about these risks and in highlighting properties that have implemented mitigation measures. Additionally, agents can inform clients about the potential for higher insurance premiums for properties with elevated risks. Property lawyers can then assist the client in understanding the financial implications of these costs within the context of the entire transaction.

Indeed, effective collaboration between lawyers, real estate agents, brokers and lenders, and the parties to the transaction, is critical to fulfilling legal obligations and ensuring transparent, informed, and responsible property deals are taking place amidst the evolving climate crisis we find ourselves in.

Climate change and property transactions

According to a case study on Coastal Erosion at Wamberal Beach, undertaken by Groundsure Location Intelligence, more than 13,000 properties in New South Wales are at risk of coastal erosion. Groundsure has developed a Climate Index Report that allows property owners and potential purchasers to assess the risks climate change poses to a property. It is a valuable tool for lawyers and agents alike enabling more in-depth enquiries to take place where risks are revealed.

Climate Valuation, another company operating in the space of climate risk analysis, warns of “property value collapse without major investment in adaptation of flood risk communities”. While influencing local council and government to take action on climate change might be beyond the means of property holders and prospective property holders, the ability to assess risk and take personal mitigation measures is not.

Climate Valuation predict that homes in areas likely to be affected by extreme weather, such as flooding, wildfires, and coastal inundation, are expected to decrease in value compared to homes in less risky areas. Accordingly, adequate risk assessment when purchasing property is imperative whether you are an investor or are purchasing as your principle place of residence.

The company also says that while riverine flooding is expected to cause the most damage to homes in the first half of this century (it contributed to nearly half of all extreme weather-related risks in 2022), damage from coastal flooding is expected to increase significantly after 2050. The risk of extreme wind and cyclones is also likely to increase in the latter half of the century, as well as the risk of bushfires due to more extreme heat days.

Steps estate agents can take

By identifying potential risks to a property and working with other professionals to gain a complete picture of the probable impacts, agents can help potential buyers make informed decisions, thus forging trusted relationships for future business.

Here’s a few steps agents can take to ensure they have all the relevant information about risks associated with a property:

Early identification of climate risks:

  • Try to identify potential climate-related risks in a property, making sure that the potential buyer is aware of things like flood zones, coastal erosion and other environmental vulnerabilities related to the property,

Due diligence and research:

  • Conduct thorough due diligence by researching the property’s history, including past environmental issues, flood or storm damage, and insurance claims related to climate events,
  • Discuss these risks with potential buyers or investors, explore risk mitigation strategies and legal considerations like flood insurance or a referral for construction and structural improvements to the home or business,

Reach out to experts for a climate impact assessment:

  • Reach out to experts to analyse the potential impact of climate change on the property’s value and future use. Expert reports use data on rising sea levels, extreme weather patterns and local climate projections that agents can present as part of their “material fact” disclosures in the buying and selling process.

Collaboration is key

Partnering with a specialised property lawyer puts potential buyers in the best position to make informed decisions and navigate the complexities of real estate deals that could be affected by climate risks.

Property lawyers will review certain documents, such as council planning certificates, legislation, and policies to uncover climate-related risks and/or restrictions.

Effective collaboration between real estate agents and property lawyers is essential to address climate-related challenges in property transactions. It ensures that potential buyers and investors are well-informed about the risks and opportunities associated with a property and also enables Vendors to better understand any climate-related challenges to selling their property, allowing Vendors to be more pro-active in addressing these challenges.

Both real estate agents and property lawyers should stay informed about evolving climate-related regulations and best practices – by attending training sessions, workshops, and seminars to deepen their knowledge and understanding of climate-related challenges in the real estate sector.

They can also look at what other sectors are doing. Companies that file annual reports, for example, should already be making climate-related financial disclosures under International Financial Reporting Standard S2. And the Australian government is currently weighing up whether to make climate reporting mandatory for large Australian corporations and financial institutions from July 2024.

The push to formalise the recognition of climate change and climate risks in the professional services sector can only be seen as a good thing.

Attwood Marshall Lawyers – helping ensure due diligence when buying and selling property

Our property lawyers understand the importance of considering the damage that properties may suffer from natural disasters and climate risks. They know how imperative it is to conduct the appropriate searches to ensure the buyer or investor knows all issues before finalising a property transaction.

Every property is different and will require different searches depending on its location and type of property. Our experienced Property & Commercial team can determine which searches are required and will ensure the conveyancing process is completed effectively.

As a PEXA-certified law firm, we complete our conveyancing electronically to ensure settlement happens on time without delay.

We can advise on contracts, searches, negotiating special conditions, and disclosure. For advice, please contact our Property and Commercial Department Manager, Jess Kimpton, on direct line 07 5506 8214, email, mobile 0432 857 300 or free call 1800 621 071 any time.

We also have a dedicated litigation team experienced in commercial disputes, environmental law and climate action. We have a solid social conscience concerning these areas and can help individuals and organisations affected by government decisions.

Please contact our Dispute Resolution and Litigation Department Manager Amanda Heather on direct line 07 5506 8245 or email for a free initial consultation.

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Mieke Elzer - Lawyer - Property & Commercial

Mieke Elzer

Property & Commercial

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The contents of this article are considered accurate as at the date of publication. The information contained in this article does not constitute legal advice and is of a general nature only. Readers should seek legal advice about their specific circumstances. 

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