Need To Buy Biodiversity Credits? How To Avoid Mistakes With The Purchase

28 March 2022
 Categories: , Blog


If you've recently purchased property and you want to make improvements to it, you may need to purchase biodiversity credits. This is especially true if you've discovered protected plants or an endangered species on your property. You'll also need to purchase biodiversity credits if you want to conduct any mining on your property. If you've never purchased biodiversity credits before, you'll need to take steps to protect yourself from potential liability. Here are some tips that will help you avoid problems with the transaction. 

Document Ownership

If you need to purchase biodiversity credits before you can proceed with your projects, the first thing you need to do is document actual ownership. Failure to identify the owner of the credits could put you at risk for a fraud claim. This is especially true if the person trying to sell the credits isn't actually the legal owner. Taking the time to identify the legal owner of the credits will save you time and money. 

Identify Potential Issues

Once you've identified the legal owner of the biodiversity credits, you'll need to go a step further. You'll also need to make sure that the owner is in good standing with their stewardship agreement. This agreement is designed to ensure that landowners do their part to protect their property from adverse environmental impact. When a landowner fails to meet their obligations, their credits can be cancelled or suspended, which means that they can't be sold. Before you purchase biodiversity credits, make sure that the credits haven't been cancelled or suspended. 

Ensure Adequate Credits

If you need to purchase biodiversity credits and you think you've found a seller, make sure they have the credits to sell. Some credit holders will sell their available credits to multiple buyers and forget to document the transactions. Unfortunately, when that happens, the credits can be oversold, which means you might be left out in the final transaction. To avoid that, you need to identify the total number of credits that the seller has available, as well as the number of credits they've already sold. That way, you know that the credits you buy are still available for you. 

Document the Fund Transfer

If you're ready to purchase biodiversity credits and you've found a seller, make sure you document the fund transfer. Once you pay for your credits, the seller must transfer a portion of the proceeds to the stewardship fund for biodiversity credits. If the seller fails to complete the deposit of funds, you could face serious problems down the road. To avoid those issues, be sure to include the transfer of funds in your purchase agreement.