Sylvie Willis
Underground fuel tanks are a rare but significant issue for prospective homeowners. While it is possible to sell a home with a buried tank, it is generally undesirable. Tanks can pose environmental and health risks, with leaks leading to soil and groundwater contamination and costly cleanups. Buyers are often reluctant to invest in a home with this potential liability, and mortgage and insurance companies may refuse to approve loans or insurance for properties with underground tanks. Buyers can use the presence of a tank as a negotiating tool, and it is recommended that they perform a thorough site assessment and request a 'tank closure report' to ensure they are not exposed to future risk.
| Characteristics | Values |
|---|---|
| Financial liabilities | Costly affair in terms of maintenance, removal, decommissioning, and clean-up in case of leaks |
| Health hazards | Exposure to several health hazards due to leaks |
| Environmental risks | Soil and groundwater contamination |
| Legal liabilities | The owner of the property is responsible for the clean-up and can be taken to court by the buyer to recover clean-up expenses |
| Mortgage and insurance | Mortgage and insurance companies may refuse to lend on a property with an underground tank and may require removal before approving a loan or insurance |
| Resale value | Presence of an underground oil tank can significantly decrease the resale value of a property |
| Due diligence | Buyers should perform due diligence when buying a property with an underground tank, including checking with the local fire department, obtaining a 'tank closure report', and performing soil testing |
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What You'll Learn
- Underground oil tanks are a liability and can decrease a property's resale value
- Buyers are often wary of the associated risks and costs, and reluctant to invest
- Soil sampling and testing can reveal contamination, which can be used as a negotiation tool
- Tanks older than 20 years are at a significant risk of leaking and contaminating the soil and groundwater
- Removal costs can be expensive, involving excavation, soil remediation, and disposal
Underground oil tanks are a liability and can decrease a property's resale value
Underground oil tanks were once common for heating and fuel storage, but they pose significant environmental and health risks. Tanks older than 20 years are at a high risk of leaking, with oil penetrating the soil and contaminating groundwater. This contamination can spread to areas under a foundation, affecting neighbours' properties and nearby companies or government buildings. As a result, clean-up costs can be substantial, ranging from $10,000 to $100,000.
Due to these risks, many buyers are reluctant to purchase properties with underground oil tanks. Buyers are often wary of the potential costs and liabilities associated with these tanks, and some mortgage companies may refuse to lend money for properties with underground tanks. This can result in a property spending more time on the market and selling for less than similar properties without oil tanks.
To address these concerns, buyers can request a soil test to check for contamination and obtain a 'tank closure report' to ensure proper removal. If a tank is present, it is recommended to have it decommissioned by the seller before taking ownership, as this transfers liability for any issues that may arise.
While it is possible to sell a home with a buried tank, it is essential to be transparent with potential buyers and consult local laws and professionals. Removing the tank is the ideal solution, but it can be costly, involving excavation, soil remediation, and disposal costs.
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Buyers are often wary of the associated risks and costs, and reluctant to invest
Buyers are often wary of the associated risks and costs of a buried fuel tank, and reluctant to invest in a property with this potential liability. Firstly, the presence of an underground oil tank can significantly decrease the resale value of a property. Secondly, there are the potential health and environmental risks. If a tank is leaking, the oil can contaminate the surrounding soil and groundwater, which can result in significant cleanup costs. This can amount to tens of thousands of dollars, with small cleanups costing around $10,000 and larger projects exceeding $50,000, or even $100,000.
It is also important to note that most underground tanks are made of steel, which rusts over time. As a result, 90% of tanks have exceeded their designed life expectancy and are at a significant risk of leaking. Buyers are aware of this and are reluctant to purchase a property with an old tank. Additionally, mortgage and insurance companies are wary of buried oil tanks and may refuse to lend to buyers or provide insurance to current owners. This can make it challenging to sell a property with a buried fuel tank.
Furthermore, the process of removing a buried fuel tank is complex and costly. It often involves excavation, soil remediation, and disposal costs. There are also hazmat protocols, permitting, and inspections to consider, which can be expensive and time-consuming. All these factors contribute to buyers' reluctance to invest in a property with a buried fuel tank.
To address these concerns, buyers can request a soil test and a tank closure report to assess the potential risks and costs associated with the buried fuel tank. It is also recommended to work with certified environmental contractors to address any environmental concerns and negotiate with the seller to have the tank decommissioned or removed before taking ownership of the property.
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Soil sampling and testing can reveal contamination, which can be used as a negotiation tool
Soil sampling and testing can be an effective tool for buyers and sellers of properties with buried fuel tanks. For buyers, it is essential to conduct thorough due diligence to understand the potential risks and costs associated with the presence of an underground oil tank. On the other hand, sellers can proactively address these concerns to facilitate a smoother transaction.
For buyers, soil sampling and testing can reveal contamination, which can be a powerful negotiation tool. If contamination is detected, buyers can use this information to negotiate a lower purchase price or walk away from the deal. It is crucial to engage certified environmental contractors to conduct these assessments and provide accurate data for decision-making.
If a buried fuel tank is discovered on the property, buyers should request a "tank closure report" and any associated lab reports. This report should detail the removal process, including soil sampling and testing for contamination. In some cases, the local fire department may have records of fuel storage permits and can provide insight into the presence of a tank.
For sellers, proactively addressing these issues can increase the likelihood of a successful sale. Conducting soil sampling and testing before listing the property can provide valuable information to potential buyers and demonstrate transparency. If contamination is found, sellers can take remedial actions, such as soil remediation, to mitigate the impact on the sale.
Additionally, sellers should be aware of the potential costs associated with removing and replacing buried fuel tanks. While it may be costly, removing the tank can increase the resale value of the property and attract more buyers. Alternatively, sellers can offer to cover some of the costs associated with tank removal and remediation as part of the negotiation process.
In summary, soil sampling and testing play a crucial role in revealing contamination from buried fuel tanks. This information can be leveraged by both buyers and sellers as a negotiation tool, allowing for informed decisions and equitable agreements during real estate transactions involving properties with buried fuel tanks.
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Tanks older than 20 years are at a significant risk of leaking and contaminating the soil and groundwater
Underground oil tanks are a significant liability for both buyers and sellers. Tanks older than 20 years are at a substantial risk of leaking, which can lead to soil and groundwater contamination. This poses a serious environmental and health hazard. Fuel oil, being lighter than water, will penetrate the soil and travel on the water surface, potentially affecting neighbouring properties. Leaks can occur slowly over time, going unnoticed by the homeowner, and can spread under foundations, contaminating large areas.
The costs of decommissioning and clean-up are expensive and can range from $10,000 to $100,000. Buyers are often reluctant to purchase a property with this potential liability, and mortgage companies may refuse to lend money for such properties. Therefore, it is advisable to have the tank removed or decommissioned before selling a home. Soil sampling and testing can provide important information about potential leaks.
If you are buying a property with an underground oil tank, it is essential to be cautious. Ask the seller to provide a copy of the decommissioning statement and any lab reports. Have an expert perform a complete evaluation of the tank and soil testing to ensure there are no issues. You can also use the presence of an underground oil tank as a negotiating tool to get a better price.
It is worth noting that most buyers walk away from properties with underground oil tanks due to the associated risks and costs. As a buyer, you will be responsible for any clean-up if the tank starts to leak after you purchase the property. Therefore, it is crucial to perform due diligence and carefully consider the potential liabilities before purchasing a home with an underground oil tank.
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Removal costs can be expensive, involving excavation, soil remediation, and disposal
The presence of an underground fuel tank can significantly decrease the resale value of a property. Buyers are often wary of the associated risks and costs, and some may be reluctant to invest in a home with this potential liability. As a result, a property with an underground fuel tank may spend more time on the market and sell for less than a comparable property without one.
In the case of a leaking tank, the cleanup costs can be substantial. Small oil tank cleanups can cost around $10,000, while more extensive projects can exceed $50,000 or even up to $100,000. The owner of the property is typically responsible for the cleanup costs, and these costs can increase if the leak affects neighbouring properties or the environment. Soil sampling and testing are also necessary to determine the extent of contamination and can add to the overall expense.
Given these potential costs, it is advisable for prospective buyers to request a tank closure report and any lab reports to understand the condition of the tank and any associated risks. Buyers can use the presence of an underground fuel tank as a negotiating tool, and it is recommended to have an expert test the tank before purchasing a property to ensure there will be no issues.
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Frequently asked questions
There are several risks associated with buying a house with a buried fuel tank, including leaks, corrosion, and improper abandonment, which can lead to soil and groundwater contamination. This contamination can result in significant cleanup costs, with small oil tank cleanups costing around $10,000 and more extensive projects exceeding $50,000.
Buried fuel tanks were once common, especially in houses built before 1960. However, in recent decades, there has been a shift from oil to natural gas as the primary fuel source for heating homes. As a result, properties with underground oil tanks are now rare.
If you're thinking of buying a property with a buried fuel tank, it's crucial to understand the potential risks and perform thorough due diligence. Have the soil tested around the tank to check for leaks and get a copy of the tank closure report and any lab reports. You can also use the presence of the tank as a negotiating tool to get a better price.
If you're selling a house with a buried fuel tank, it's important to be transparent with potential buyers and disclose any relevant information. Check your state and local laws, and consider having the tank removed or decommissioned before putting the house on the market. You may also need to provide a copy of the decommissioning statement and add it to the property title.
