Home Buying in 07666>Question Details

Anthony Bert…, Home Buyer in 07666

There is a property that I'm ready to make a bid on. However the property has an underground oil tank that

Asked by Anthony Berthoumieux, 07666 Tue Oct 28, 2008

owner has very little info on. My question is should the tank be removed and should it be up to the sellers to deal with that. All I'm hearing is horror stories about the cost and getting home owners insurance.

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If you read the "insurance policy" provided by oil companies, you will see that it is little more than a service contract. With so many conditions, limitations, and exclusions that you really have no protection at all in the event of a serious leak.

Furthermore, insurance companies are starting to drop homes with oil tanks. They don't want the liability.

In this market, with so many homes available, I wouldn't even consider a home with an underground oil tank unless the sellers agree to remove it. In the final analysis, they will have to remove it whether they want to or not if they want to sell the home.

And I must repeat, oil tank insurance policies are NOT sound protection. Once a tank is leaking, the EPA gets involved. And if there is an aquifer running under your house that needs remediation, your house may have to come down. Even if there was insurance that covered all this, which there isn't, who needs the aggravation?

Web Reference: http://www.marcpaolella.com
0 votes Thank Flag Link Thu Oct 30, 2008
Anthony: As you have heard, oil tanks, in-ground, under the porch, outside above ground on a pad or in the basement can leak. This can cause a clean up that can cost thousands. If you purchase a property with an oil tank, you are exposed to the potential for this kind of problem.

On the other hand, there are hundreds of thousand oil tanks in use in the state, some of which are in-ground. Some sellers can be convinced to pull the in ground tank, others won't (or can’t) do it. So you have the first issue, that of: do you want the property badly enough to assume the risk, if the owner does not yield the removal?

Insurance. You have had at least one negative report on the value of tank insurance. Within the last year, I have heard from a representative of the oil industry say that adequate insurance was easy to obtain. I have not found it to be so when calling oil dealers lately but truthfully, I did not press the issue.

You may also look into the cost of removal and decide if it is such that you are willing to take on the risk. I recently received a quote from Quick Environmental Oil Tank Specialists that was very modest and, in my opinion, low enough to be a way for someone to get the house they wanted at a reasonable total acquisition price. I have not had Quick actually do any work, so I am not recommending for or against them but merely pointing out a firm I know to be willing to respond with a quote. You will have to determine if you want to opt for them and that solution.

Having said all this, I would, of course, say that if you can convince the seller to take on the expense and risks associated with removing the in-ground tank and replacing it with a better system, you should do so. It doesn't hurt to negotiate for the best situation you can get, no matter what the issue. That's part of what Realtors do; attempt to get the best for their clients!
0 votes Thank Flag Link Thu Oct 30, 2008
As already stated it is best to have it pulled. If the owner has little or no documentation, negotiate for a tank test. If the tank is still in use, check with the oil company. Underground tanks can be a big problem, but if the test comes back clear, the cost of removal is not excessive. It is just another negotiating point.
0 votes Thank Flag Link Wed Oct 29, 2008
You are talkiing about environmental issues and big bucks. There is considerable risk involved with taking this direction. Are you certain you want to embrace the liability involved with this transaction.

If it is a minor or non-issue, why hasn't the owner dealt with this situation and resolved the problem? Unless this is a very, very desirable property or you have plans that are unique to the property, the risk may be too great to move forward. Something only you can respond to..............
0 votes Thank Flag Link Tue Oct 28, 2008
Have seller pull it, dont take a credit or use escrow. Dont close until it is out and if contamination is present dont close until you get NFA (no further action) letter from DEP. I had an above ground leak which cost me (and my insurance company) over $300K.
Be wary of the tests that indicate no leaks as I have seen first hand where tested tanks which were supposedly ok were not.
0 votes Thank Flag Link Tue Oct 28, 2008
First question is if the Tank is in use... If it is and there is a policy on the property then the insurance policy should be transferrable to the new owner.

That aside, I would have the owner remove the tank. I have seen costs at about 5,000 without any problems to 10 - 12,000 with soil removal. You need to have an inspector look into it and give you a price.

There are a lot of home in NJ that have oil tanks and there is a remediation process if there is any issues.. you can have it looked at and make decision from there.
0 votes Thank Flag Link Tue Oct 28, 2008
I wouldn't let any of my buyers purchase a house with an inground oil tank. The sellers should remove it or have it declared legally abandoned ( if its in a spot that they cannot get at it) and most importantly provide you with a clean soil test certification.
Web Reference: http://www.dianeglander.com
0 votes Thank Flag Link Tue Oct 28, 2008
Contact an insurance agent regarding this issue YES your concerns are extremely valid. You might have to have soil testing and etc, prior to bank lending any money purchase the property.
http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Tue Oct 28, 2008
Hi Anthony,

You should have the seller remove the tank or provide a valid closure certificate if it is no longer in use. You simply cannot buy a home with unresolved oil tank issues. If there is an aquifer on your property and there is a leak, the cleanup costs can run above $100,000.

FORGET OIL TANK INSURANCE. It's not worth the paper it's printed on. Many sellers and sellers agents will tell you not to worry, there is insurance. Don't listen.

Your agent and attorney will corroborate what I'm saying.

Web Reference: http://www.marcpaolella.com
0 votes Thank Flag Link Tue Oct 28, 2008
Is this tank "in use" or no longer in use? This will make a difference in how the tank should be addressed.

In either event, make sure that your rights with regard to the tank are spelled out during Attorney Review, and make sure that addressing the tank is the seller's problem, not yours.

Good luck, Jim
Web Reference: http://www.BuyersLawyer.com
0 votes Thank Flag Link Tue Oct 28, 2008
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