Donated Properties and Due Diligence

Cities and towns sometimes find themselves on the receiving end of donated property when the owners of an unused parcel or other property aim to contribute it for the public good. The properties can seem like free gifts, full of potential, and so councils are often eager to accept them. First, however, they need to consider the possible risks inherent with the property and determine whether the benefits outweigh those risks. 

City-owned properties can be a source of premises liability claims. For a municipality to protect itself against these claims, it must be able to demonstrate that it exercised reasonable care to protect individuals from harm resulting from known conditions. This also applies to conditions of which the municipality should have had knowledge. 

Cities can protect themselves from significant liabilities if they establish criteria for when to accept property and then follow the criteria consistently. The procedure for accepting property should include a determination of potential problems that exist. Common concerns about donated properties include whether the property is vacant and whether it has environmental hazards such as asbestos and underground storage tanks. Many donated buildings are vacant or partially occupied, and have damage resulting from fire, natural elements, vandalism or a lack of utilities.

The property donation procedure should also evaluate the property for its utility to the city, and determine whether there is any deferred maintenance on the property, such as windows or roofs in need of replacement. If so, the city will need to take steps to address the deferred maintenance immediately.

As the city evaluates the property, it can gain useful insight and identify concerns by involving several staff members:
  • the city attorney,
  • the staff member responsible for risk management or liability claims, and
  • the head of the department that would take over the property. 
Cities should also consult with their property and liability insurer to determine what coverage exclusions or limitations may apply. 

Although cities may want to accept a donation with plans to modify the property, renovation or demolition of most properties is subject to state and federal asbestos regulations, as well as Occupational Safety and Health Administration standard 1926.1101. Although Environmental Protection Agency and Consumer Product Safety Commission regulations have banned many uses of asbestos, some materials remain legal for sale and use. The materials that are not banned include materials where asbestos fibers are generally well bound in the material, which can include many flooring, insulation, and roofing products. Officials should not assume that a donated property is free of asbestos, no matter its age or condition. Contact the SC Department of Health and Environmental Control for a list of certified property inspectors.

Contamination from underground storage tanks may also increase the city’s liability exposure. Conduct an assessment to determine if underground storage tanks are present, and if removal or cleanup is required. Cleanup must be done by companies that are certified by DHEC. 

Taking these steps as part of a city’s decision-making process to accept or decline a donation can prevent harm to residents and city staff and save the city effort, time and liability costs.