Cg, Home Buyer in New Jersey

Purchasing foreclosure with abandoned Oil tank (never decommissioned).

Asked by Cg, New Jersey Thu May 22, 2008

Are there any NJ laws that require the seller (in this case the bank) to remove this tank? I am still waiting for the soil sample results and will need to know how to move forward once i receive this information. Thanks

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25
Cg, Home Buyer, New Jersey
Thu May 22, 2008
Thank you for all your responses and I will post back our findings. Just a few pieces of the puzzle based on some comments. This is an REO property and yes it's "AS IS", for the bank will NOT complete any repairs on the home as stated by their attorney. The house was converted to gas but the tank was not properly decommissioned (I can still see liquid through the tank's filler neck. I just had soil samples taken today and am awaiting the results.
I have done a lot of research regarding these USTs and have had family members deal with both a contaminated tank which resulted in 50k worth of remediation and another whom was able to sand fill the tank. That being said, if the samples come back positive for contamination, I will begin the battle with the bank to have the site remediated prior to closing (blue sky picture I guess).
I too disagree with some comments and will have to side with Victor, but I do appreciate all your feedback!

I will post back all my findings and results to this purchase.

Thanks!
3 votes
Kenneth Verb…, Agent, PRINCETON, NJ
Fri May 23, 2008
Another warning Cg,
I have had an above ground oil tank leak and personally oversaw the clean up and expense involved. In my case the cost was around $300,000.00 In addition I have represented buyers and at my urging had tanks removed before settlement even though the testing around the tank showed no contamination. I recall very well one case where there were leaks in the bottom of the tank that resulted in contamination immediately below the tank. I now have new above ground oil tanks on a couple of my own properties but these are the new double wall Roth tanks that come with about 1M in insurance coverage, leak detection etc. I also have gas in other homes, both have their own benefits and risks.
The turn around time can take months for the nfa letter from the DEP and many attorneys will advise you not to close until this is issued. Currently the state has a program of helping fund some tank removals and perhaps this tank could qualify though I am uncertain since it is REO.
One thing I am certain about is that I would not close on the house until this was removed, not merely tested or inspected. By the way one bright spot could be that if the tank leaks really bad and gets off site into public property or neighbors property etc there may be some insurance that kicks in. If not the owner may have to handle the bill which could be much more than the value of the property. Feel free to email me directly if you want more info. I have been down that road
good luck
2 votes
Hi, I have a oil spill in my property, and the clean-up may be more than the value of the property.Does a foreclosure will transfer responsibility with MassDEP for clean up of the oil spill to the Bank?
Flag Thu Sep 24, 2015
Victor Kamin…, Agent, Edison, NJ
Mon Jul 30, 2012
Wow this is an old post but for people not in the know, if they find a buyer willing to buy as-is and assume responsibility the seller isn't "required" to do anything if your purchase contract has a cap in place on buyer or seller responsibility for repairs over a predetermined dollar amount.

Either way I would not recommend buying a house where it's left up to you to handle environmental issues, especially if it is known that an underground tank is leaking as it can be costly to remediate.

Grants or no grants, remediation can be costly if there is an actual leak depending on the level of leakage and if there is any water sources or neighbors properties contaminated by it.

Only if you're aware of leakage should you report to the NJ DEP and they may force the sellers hand to fix the problem before it get's any worse.
1 vote
Myke, Home Buyer, 89449
Thu May 22, 2008
Victor - regardless of wheter you think it's the enviroterrorists or the tooth fairy... the point remains that if there is a problem with an oil heating system - it is extremely costly to deal with, and there are a lot of regulations surrounding it.

period.

Any opinions you have as to the cause, any political beliefs you might hold, or talking you want to do about how to change it - doesn't have any impact whatsoever on this very simple fact.
1 vote
Marc Paolella, Agent, Succasunna, NJ
Thu May 22, 2008
I would not, under any circumstances, buy a house with an underground oil tank. It's really that simple. If you do, you are taking an unnecessary risk with the financial health of you and your family. Either they remove it, or you should move on to another home.
Web Reference:  http://www.marcpaolella.com
1 vote
good answer
Flag Sat Sep 17, 2016
John Gordon, Agent, Mesa, AZ
Thu May 22, 2008
I agree with the other answers, get legal advice. In Arizona the law is not very consumer friendly in this area, it may be different where you are, however here the responsibility would be on you as the buyer if you were to close escrow without remediating the problem. Basically a "you bought it it is all your responsibility" policy. You cannot go after the prior owner. Check with a local agent for what they may know and as always, Real estate agents cannot give legal advice, always contact an attorney.

Good Luck!

John
1 vote
Victor Kamin…, Agent, Edison, NJ
Thu May 22, 2008
When speaking of "Law" you must seek the advice from an expert in that field, an Attorney.
ALL realtors should give the same answer, consult with your attorney.

That being said...

When purchasing foreclosures, keep in mind the term "Caveat Emptor" or "Buyer Beware" any liens for unpaid debts, judgements, unpaid taxes and so on become the problem of the purchaser, the same goes for any repairs needed to be done, "usually".

This is a good question, I wish you'd post the answer when you find out for sure.

My guess, the bank wont take responsibility and won't be held liable to do any remediation especially for a property being purchased at a foreclosure auction. Read the paperwork you signed in order to bid at the auction, most likely there was something buried in there about you doing your own due dilligence before bidding and accepting the property as is and being responsible for...EVERYTHING!!!

Please post the answer when you get one though, I'd like to find out how things turned out.

http://www.realrep.com
Web Reference:  http://www.MarivicRealty.com
1 vote
John Gutierr…, Other Pro, North Arlington, NJ
Mon Jul 30, 2012
Contact the NJ DEP and. Report the contamination. Then your in a position to have them remove the contamination. All leak have to be reported. Also NJ. Dose not offer the grant any more the fund was tapped out. Also you want the sellers to deal with it you may have a third Party claim against the home. Consult with a enviremental contractor. Hope thIs helps
0 votes
Bajro, Home Owner, Hackettstown, NJ
Mon Jul 30, 2012
i wanted to now if the owner can clen contaminated soil from oil leeks
0 votes
Rob Salt, , Toms River, NJ
Mon Sep 27, 2010
Currently, NJ does not require residential property owners to remove underground heating oil tanks. The problem exists when a buyer is attempting to obtain a loan and/or insurance when an underground heating oil tank is present.
The NJDEP and NJ Economic Development Authority are offering grants and/or low interest loans for those homeowners that are finanically eligible. If you wish to speak with a NJ Grant Expert, please contact us with your questions. Go to our website for our numbers.
0 votes
Fabco, , Long Branch, NJ
Thu Sep 23, 2010
If the tank is not being used, it must be removed and a permit is required by the town
Web Reference:  http://www.fabco-nj.com
0 votes
John Gutierr…, Other Pro, North Arlington, NJ
Mon Nov 2, 2009
Hi to all I would add an informative experience on an inspection I did.
I had a client call me for an inspection one of the services that I recommended to my client to have the property screened/Searched for any undisclosed/ abandon storage tanks.
Well long and be hold Lombardo Environmental found the tank with there equipment the tank.
When the buyers agent called the sellers agent. OH there is a tank it was abandon.
This info was not disclosed to the buyer. Then I recommended soil samples if the sellers couldn’t provide the samples from a lab. The seller never had it done. The buyers ordered soil samples the came back dirty. At the time of the soil samples extracted on site the tech showed the buyers the Oil smelly soil.
To give some insight how abandonment takes place. The environmental contractor pulls a permit to abandon an underground Oil storage tank. The contractor opens the tank clean it out. Then the building inspector looks at the tank for holes. Keep in mind he or she will not go into the tank they don’t look very well at the tank. Then the tank is filled.
I have many stories to tell about how this type of information is never disclosed.
The basement are finished off never can see the evidenced is hidden.
Never rely on the seller’s info they want to sell. Do your own due diligence.
Web Reference:  http://www.hometechnj.com
0 votes
Kenneth Verb…, Agent, PRINCETON, NJ
Mon Jun 2, 2008
good sign but no guarantee as leaks directly below tank may not be detected. (keep insisting upon the removal before the close and let us know how it turns out)
Ken
0 votes
Cg, Home Buyer, New Jersey
Mon Jun 2, 2008
Update: The soil samples came back clean. No contamination. I am having my attorney send a letter I would like to have that tank removed prior to closing.
0 votes
Cg, Home Buyer, New Jersey
Sat May 24, 2008
Wow.. you guys are very knowledgeable!.. I took would like the tank removed prior to closing, and my attorney is well aware of this. I had the home inspection done yesterday and everything went smooth. The inspector continually stressed to have the tank removed since it will remove us for being liable to any remediation problems regardless if there is a leak or not. What he did find was the gas furnace is 29 years old! The house was built in 1947 so i'm assuming the tank was only in use for 32 years. I wonder why they did not properly decommission this tank!?.. Anyway, you can still see oil through the filler neck therefore I know the chances of holes within the tank are possible. Hopefully I will have the results of the soil samples come Tuesday and will post back then... Thanks again for all your suggestions/opinions! Have a great Memorial Day Weekend!!
0 votes
Kenneth Verb…, Agent, PRINCETON, NJ
Sat May 24, 2008
To address Victors questions,
2 family home which was owner occupied. As each oil fired appliance requires it's own burner between 2 water heaters and 4 heaters (multi heaters for multi zone including heated garage) there were 6. Small leak which was not detected until it got bad. (pin hole leaking into and thru foundation which ended up in French drain and into storm sewers) Leak also contaminated septic field which as a result had to be replaced at an additional $40K+. Tank was small 280 gal and as leak went on for a while in small quantity not noticed. In my case it was the state DEP that oversaw the remediation. I have never heard of the EPA getting involved though perhaps for a federal case that may happen. I suspect though that if involved the EPA would merely push the DEP to address. As to the older tanks used both inside and out, these are typically single wall steel tanks. The newer double wall tanks have a plastic inner tank, and an outer galvanized shell. Between the two is the interstitional area where monitoring takes place. If there is a leak into this area there is an indication. The Roth tanks can be used inside or out with a weather cover which is an attached "A" frame of the same material as shell. They do not sit on a pad but rather a metal frame work but this only lifts them 2-3 inches off ground or slab.
Contaminated soil is treated as hazardous waste which is why it is so expensive even for small leaks. Mine required partial removal of my garage floor, removal of soil under my footings as well as an area about 40'x 70' to a depth of about 12'. The reason I had oil heat was I could negotiate a good price for oil as I bought for multiple properties and gas was not readily available. In my Trenton home I have both gas and oil (2 furnaces) and adjust my heating based upon which is priced better. If I were independantly wealthy I would likely be installing solar panels on all my properties and ditching both gas and oil and looking at newer efficient heat pumps (with the price of gas where it is and seems to be going it wont be long before we all have to take a look at going "green".
Hope this explains better
0 votes
Dallas Texas, Agent, Dallas, TN
Fri May 23, 2008
OH MY ... contact the city determine what they state, however I have seen many Dallas foreclosures that violate the city codes . Maybe you could receive a better deal when the city is willing too issue fines. My concern is the soil and etc etc etc.
Web Reference:  http://www.lynn911.com
0 votes
Victor Kamin…, Agent, Edison, NJ
Fri May 23, 2008
Kenneth you had an oil tank that leaked which resulted in a $300,000.00 cleanup cost, HOLY COW!!!!! How much was the house worth?
Are we talking about a house or commercial property? Single or Multi-Family?
How large of a leak was it?
Was it near a reservoir or underground stream?
Those are the factors which will determine the cost of an oil spill contamination clean up.

Usually with oil tank leaks you won’t see a FULL tank spring a leak and totally drain into the surrounding soil, those are extenuating circumstances where I can see it costing a fortune for cleanup.

By the way you keep mentioning 6 burners; I'm assuming Cg is considering a single family home vs. a commercial residential property.

My brother went to refinance his house about two years ago and the bank required an oil tank test for the refi, they found water in the tank thus determining there was contamination in the ground because of a leak.

Unfortunately he made too much money to qualify for the grant, had nothing to do with contamination, I've got to look into what is exactly covered by the EPA remediation grant.

Anyway, they drained and removed the tank, tested and removed truck loads of the soil from around the tank to cook/clean it and replaced it with back fill.

BTW. There was NO contamination in the soil but the EPA wanted it cleaned anyway... I later found after being there a total of 10 minutes that the breather pipe sticking out of the sidewalk next to his house for the oil tank was rotted at the bottom where it met the sidewalk and you could stick your finger in it, my guess that is how the water got into the tank which nobody checked. FYI, they found no holes in the tank, just a little common surface rust and assumed oil / water leaked through the pores of the rust.

All in all the total cost of the cleanup was $15,000

Depending on the degree and circumstances any kind of remediation can be expensive, from asbestos to oil leaks but still think oil heat is an excellent type of heating as I'm sure you do as well otherwise after over 20 years of having oil heat one would guess you would have opted to change it over to gas, perhaps with one of the many free offers pse&g and other gas companies offer yearly trying to get people to switch to gas by offering free & low cost system equipment change overs.

Above ground tanks should be covered in a shed or storage cover to protect it from the elements if outside, not required for indoor tanks. They should also have a catch pan under them in case of leaks, these are simple preventative measures which many homes already have, if not they should.

Also I noticed you did not mention anything about the cost of oil heat vs. gas, this can be a blog topic all on its own, actually it is.... ;-D

Read this blog article to see what others have to say:
http://www.city-data.com/forum/automotive/73311-oil-vs-gas-h…

Some Love it, Some Hate it... Everyone has an opinion...

Victor
http://www.realrep.com
Web Reference:  http://www.MarivicRealty.com
0 votes
Kenneth Verb…, Agent, PRINCETON, NJ
Fri May 23, 2008
Cg my apologies for not addressing some earlier comments from other agents.
Oil equipment is more expensive than gas equipment. I own both and know from experience. The chimneys used for oil fired appliances are far more expensive than those used for gas appliances (even those that are not direct vent and use PVC). I dont recall ever seeing a direct vent oil fired furnace and though one may exist I doubt it would be in the same price range. Also- the grants that are around now are mostly for tanks that havent leaked as the state is trying to get people to remove underground tank before they leak. If a tank is leaking (if you find contamination Andrew report it to the DEP) The tank will have to be addressed and a DEP case number will be assigned. Oh yeah, service contracts on oil equipment is also more than gas. Check out the PSE&G rates then compare to what the companies typically charge. (I have had contracts on my oil equipment for 20 years and at my last renewal I was looking at over $2,000.00 per year for 6 burners!) And in case you didnt read my earlier posting, older above ground tanks can leak too!
0 votes
Victor Kamin…, Agent, Edison, NJ
Thu May 22, 2008
Myke - Ouch did I strike a nerve? lol...

Oh lordy...

Where do you get your info from, oil heating systems are not costly to maintain these days especially if you have a maintenance contract with them which is generally very cheap.

As far as regulations surrounding oil heating systems vs. gas please quote me a few in plain english, no cut and paste articles please. I'd like to know what concerns you have?

Oil tanks above ground or in basements don't have issues surrounding them, or at least I havent come across any have you? If so explain.

Whenever someone on this site states facts without data or resources to back it up I'm usually skeptical, sorry for that, not picking on you so don't feel that way, okay!

In response to Gina's post, the cost for remediation can be offset by government grants available to remediate the problem. Most of the companies which remove oil tanks and provide remediation can file for these grants for you and usually have people on staff to get these funds automatically.

Good Luck...

Victor

http://www.realrep.com
Web Reference:  http://www.MarivicRealty.com
0 votes
Gina Chirico, Agent, Fairfield, NJ
Thu May 22, 2008
CG,

Reading both Marc and Victor's responses, my next question is...you say abandoned oil tank - what kind of heat is in the house now? Has it been coverted to gas or an oil tank above the ground? Soil contamination is not the easiest thing to deal with and the EPA will get involved to make sure the contamination is properly removed from the grounds. It can be quite costly. If there's no contamination then you just have the abandoned tank to deal with - get a few estimates from licensed companies for prices so at least you know what the cost will be should the bank not remove it. If you need some companies, I'm sure many of us on Trulia can provide you with some or ask your agent.

Please let us know the outcome. So many people post questions and we are never made aware of the outcome of these questions we took an interest and took time to respond to.

Once again, good Luck.


Gina Chirico
Prudential NJ Properties
West Essex Regional
973-239-7700 ext 132
973-715-1158
GinaChirico@PruNewJersey.com
0 votes
Victor Kamin…, Agent, Edison, NJ
Thu May 22, 2008
I don't agree with Marc there... That may be just a little OVER concervative...

I'd say it depends on how much your getting the house for and finding out how much it could cost to remove the tank and worst case senario if the soil is contaminated how much it would cost to remove & clean or replace the soil. I don't see how a leaky underground oil tank will pose a health risk to your family unless your drinking well water where the well is anywhere near the contaminated soil.

Oil heat is still good heat, I still see people turning away from houses with oil heat and cant explain why gas is better or how its safer? The price of gas tends to be higher and I see a lot more natural gas explosions and massive ones at that; actually I can't recall hearing of anyones oil heat tanks exploding do you? I think in a world with a growing population of enviornmental "extremists", the issues seem to be getting blown way out of proportion and the conservationists causing more of a negative impact to daily living than even the oil companies. ;-D

We have a lot of untapped natural resources in the USA right in Alaska but yet we have fuel shortages?
Granted this cant be blamed totally on the environmentalist, our trade policies with other countries are not very balanced so we gotta blame our politicians and ourselves for allowing of such "politiking" to begin with. Not a "President Bush" issue, for those getting ready to reply with a Bush Bash, this has been going on for years and crosses party lines, we give other countries way too much and get way too little back in return.

Getting WAY... OFF... TOPIC... now so I'll leave it at that...

http://www.realrep.com
Web Reference:  http://www.MarivicRealty.com
0 votes
Kathy Tinsley, Agent, Medford, OR
Thu May 22, 2008
Always be careful buying a foreclosure, they usally are AS IS, when purchasing. Most states have a hazzard matierial company who can move the tank and any contaminated soils. Good luck. You might check with an attorney.
0 votes
Barbara Ostr…, Agent, Closter, NJ
Thu May 22, 2008
Ask your lawyer about this.
0 votes
Gina Chirico, Agent, Fairfield, NJ
Thu May 22, 2008
CG,

I don't know of the legal answer to this question. Have you spoken to your attorney? In most circumstances should this issue arise, it typically is the seller who bears the costs. With that being said, were you aware before putting in your offer that an underground oil tank existed? In addition, should the results come back as contaminated - that is a whole other issue that needs to be dealt with by the seller.

You should definitely speak with your attorney on this matter.

Good Luck.

Gina Chirico
Prudential NJ Properties
West Essex Regional
973-239-7700 ext 132
973-715-1158
GinaChirico@PruNewJersey.com
0 votes
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