REAL ESTATE AND OIL TANKS22 Jannuary 2015
Most real estate agents know all too well that hidden conditions on a residential property can be a seller (and buyer’s) nightmare. One of these unseen, but very present, is old buried oil tanks. While these tanks may have been commonplace in the past, many are out of use today. What you find out about these tanks may delay, or even destroy a real estate sale.
While there are no laws or regulations which require the removal of such tanks before a property is sold, buyers may be leery of purchasing a property with an oil tank. There are regulations which may require inspection, abandonment or removal of these tanks under certain circumstances, including construction at the site, or conversion to natural gas.
Even without such a condition, if a tank is found to be structurally unsound or if the surrounding soil is contaminated due to a leak, the owner of the property at the time the issue is discovered will be responsible for cleanup costs. The owner will not be able to seek reimbursement from any previous owner. Also, while the UST Fund once provided assistance, current applications are not being processed or approved due to insufficient funds. Lastly, even if homeowners insurance provides coverage for the property, contamination of soil due to oil tank leaks may not be covered. Cleaning up contaminated soil surrounding an unsafe tank may become an enormous financial burden to the property owner, as the owner is not only responsible for removing the tank, but for removing all contaminated soil in the affected area.
Determining whether a tank is unsafe may be next to impossible without excavation. In fact, if a tank exists and is not in use, the Department of Community Affairs, in a public bulletin, recommends that the owner properly abandon or remove the tank “because, eventually, the tank will become unsafe.” Abandonment of the tank may create a host of additional concerns, making removal of the tank prior to sale or listing the best option for sellers who are eager to sell their property quickly and avoid conflicts from potential buyers.
So how does a seller go about removing an old oil tank to avoid all these potential pitfalls and expenses? In NJ it is a mandatory requirement that a tank removal contractor must be accredited specifically for oil tank removal. Not just any excavation contractor will do. Property owners should hire a tank removal company who is fully licensed for oil tank removal and who has extensive expertise and experience with oil tank removal.
Addressing an oil tank issue prior to listing the property, or having a plan to do so before the sale, is highly advisable. Removing a tank removes the possibility of any unforeseen problems arising during attorney review which may delay or even stop the sale. It may also make a property more attractive to buyers who may think twice about making an offer on a property with an existing tank.