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When buying a house you inherit the improvements, the land, and the fixtures. An oil tank would be classified as a fixture as it is connected to the house as a fuel source. Generally speaking, an oil tank would be thought of as something typically transferred during the sale.  The tanks in the photo below are newer, about 13 years old, and are in an 80-year-old house, the layperson's opinion would be great new oil tanks, right? Well, the older, wiser bull would ask -  what happened with the prior oil tank?

The answer would be the prior oil tank is in the ground or rather underground, and the in-use underground oil tank was replaced because the water was entering the oil tank the oil tank was not removed because it cost money and the new oil tanks were an unexpected expense. Trust us the buyer is going to want the buried tank removed.

To finish the story above, one of the oil tanks did leak, about $14,000 to clean up, so not that bad.

Oil tanks are a great exception when it comes to real estate.   Oil tanks are a known liability, a Recognized Environmental Condition (REC), or an Area of Concern (AOC). Oil tanks age and wear and when the failure occurs,  oil leaks, which causes soil contamination, which under current laws is the responsibility of the owner to repair and remediate.  Now, buyers are known to sue sellers after the sale occurs if they discover the oil tank leaked and buyers believe owners did not disclose this key defect. 

Can you sell a house with an oil tank that is in use or decommissioned or abandoned?  

Sellers can indeed legally sell the home, but in the rare times this does occur there is liability generated for both buyer and seller.   To buy a property with a tank is to assume the liability associated with the tank, which some buyers assume is no liability.

Why would a seller want to sell a property with an oil tank?

First to remove and replace an oil tank, budget $2,000 for removal and $3,000 or more to install a new oil tank. Converting to natural gas, budget $10,000. The first reason to sell with an oil tank is seller saves money and why would a seller want to upgrade a house they are selling? But that isn’t even the real reason sellers sell with an oil tank, it's because the remediation of an oil tank can cost $30,000 or more, or less, but the cost to remediate is more than most people can budget, so it’s an expense people avoid.

 So who has liability when selling a house with an oil tank?

Both buyer and seller have liability. For a seller, when the transfer occurs, no doubt the buyer is not anticipating a $50,000 cleanup and when that occurs, lawsuits occur as the buyer suspects the seller knew about the oil tank and lied. Sellers who sell tanks are viewed as used car salespeople. We have seen every sort of lawsuit from Estates to retired people to young couples selling to buy a larger home, in every scenario the buyer finds contamination that they believe the seller knew about. In most cases the buyer wins and the seller pays.

How does a buyer have liability for buying a property with an oil tank?

Buyer beware, break it you buy it, possession is 9/10^th of the law. Whatever the term, if you own the property, you own the problem. Sure, you can sue the seller as in our example above, but if it is say an Estate and the estate dissolves and the money is gone, good luck.

What if you have an abandoned oil tank and disclose it to the buyer?

Buyers buy homes where the seller discloses they had an oil tank filled in place tank, after they buy the property they realize that an abandoned oil tank doesn’t mean no leaks. The saying goes as long as it was abandoned properly, that oil tank does not present any legal issues. The real question isn’t whether a seller can do it, it’s whether a seller should or to put it in simple terms are you 100% the abandoned oil tank does not represent an issue?

Case in point, property being sold, owners did not disclose an oil tank.  The buyer does an oil tank weep and finds an oil tank.  Sellers dig up information on the oil tank, even though two days earlier they did not know the underground oil tank.   Curren Environmental is requested to review the paperwork.  It included an invoice, a copy of the permit (to fill the oil tank in place), a copy of the oil manifest, a hand-drawn map of the property and a one-page letter which I snipped below. 

Makes No Warranty or Certifications to Soil, Groundwater, or Environmental Conditions.

So did the tank leak?  I don't know, but the company that did the work is not saying it did or didn't. per the statement above. 

The next step is to the oil tank gets removed and tested, because the paperwork is insufficient in today's environment, but to be fair this wasn't sufficient in 2005 either, but the people who owned the house did not want to find a problem so they hired a company who would not test the soils.  Of course, flashforward to today and they are paying again to get the tank decommissioned so they can sell the property.

What do you have that says the oil tank did not leak? 9 times out of 10 it’s the wrong document, like my example above. A thousand other set of documents that is insufficient to certify the oil tank as nonleaking. 

Buyers and sellers need to be on the same page with oil tanks.

Did you look for contamination when the oil tank was abandoned?   Like when a dentist looks for cavities, when you abandon an oil tank there are steps you take to certify the tank did not leak, and also testing, like an x-ray.

What if you remove the oil tank instead of filling it in place? Would we find contamination?  

We often find contamination when removing abandoned oil tanks. Yes, you read that right, we find some evidence of contamination, of past soil contamination (maybe a previous tank buried in the same area as an abandoned oil tank, sometimes we find a 2^nd oil tank. In all these situations we find contamination that wasn’t picked up before, and now it's reportable to the state, and the owner has to clean it up. How do you know if you have proper documentation certifying a tank did not leak?

Every year we peer review thousands of reports, lab data, and documents about prior environmental work, to see if our clients are covered. Often the data is lacking or there is an issue that people gloss over.  In most all cases, we have to recommend the removal of the tank, which is reverse engineering the prior work.

Is it better to remove or abandon an oil tank?

Removal is always better because the tank is gone, there should be no issue if it leaked because you can see the tank out of the ground and it’s easy to collect soil samples from the ground after the tank is removed.

Tanks destroy curb appeal so if selling a house with an oil tank, no one is going to say hey that’s a benefit. The number of buyers is smaller than a property without an oil tank. A house that has an abandoned underground oil tank will stop most buyers in their tracks because the buyer doesn’t want to inherit some problem in the future.

We have had plenty of clients (who eventually hire us to remove the oil tank) selling with a properly abandoned oil tank, properly abandoned in the ground. All permits were obtained, but the deal repeatedly falls apart. Why?  Because the buyer goes into attorney review, and they talk to their attorney and decide they won’t proceed out of attorney review unless the seller agrees to remove and test the oil tank.

Now many developers and house flippers will buy a house with an oil tank, but you hope they disclose the tank to the next buyer, otherwise, lawsuits occur, and the original seller whom the flipper bought the house from gets sued. Why sue?   Because an oil tank is found and the buyer demands removal, then contamination is found and you, as the original seller, obviously knew about the contamination.

Let’s say you even find someone who wants to buy the house with the oil tank, well the mortgage company may have a thing or two to say. Most lenders are hesitant to make a loan on a property that has an abandoned underground oil tank, even if you have permits. Sometimes for certain loans, the oil tank makes the lender pull the load or the lender wants the tank removed to provide a mortgage.

These are some of the reasons why an oil tank should be properly removed and documented.   yo less likely to get sued and more interested buyers translate to a higher purchase price and of course less headaches.

Residential heating oil tanks are regulated in New Jersey by the New Jersey Department of Environmental Protection (NJDEP). 

On August 6, 2018, the NJDEP adopted new rules governing the administrative and technical requirements for the remediation of a discharge of heating oil from Heating Oil Tank Systems (HOTS) (N.J.A.C. 7:26F). These proposed rule changes have been in the works for years. The old program was called UHOT, the new program is called HOTS.  Tank that fall into the NJDEP HOTS regulations are:

Residential Aboveground heating oil tanks (ASTs). 

Small Aboveground non-residential heating oil tank systems.

Underground Heating Oil Tank System (2,000 gallons or less in capacity).

Generally speaking most HOTS tanks are residential sites.

The idea behind a system for residential sites is to be able to expedite leaks associated with these tanks, as issues with leaking oil tanks arise during real estate transactions.  Ultimately following the HOTS program for a leaking tank will provide the RP (responsible party) typically the owner with a No Further Action  letter (NFA).

The main changes in the UHOT to HOTS regulations are as follows:

• When soils are present above NJDEP standards beneath a residential structure, up to 15 cubic yards can remain in place, which would require a HOTS deed notice. In short, the presence of the contamination would be noted on the deed.  Some buyers may be turned off by this contamination remaining which could affect the value of the property.
• Remedial excavation bottom samples are now determined by the size of the tank as opposed as to the size of the excavation. Previously the number of bottom samples was based on the excavation size J.A.C. 7:26F-3.4(a)2i(1) “ Collect one sample for every six feet of tank length or fraction thereof.  For a 550 gallon oil tank you would take four sidewalls and one bottom.  You would need additional bottom samples if the tank is longer than 6 feet.
• If a remedial excavation extends to within two feet of groundwater or bedrock, a ground water investigation is required;
• If groundwater is not encountered to a depth of 35 into bedrock after 24 hours, no further groundwater remediation is required.
• Confirmatory groundwater sampling is not required if initial ground water results are below the NJDEP Ground Water Quality Standards (GWQS) upon completion of the remediation.

Curren has completed thousands of tank projects, both simple tank removals and remediations.  If you have a HOTS question, contact our office, we offer a free initial consultation.

Monday to Friday 8 AM to 5 PM

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Is my residential heating oil tank regulated in New Jersey?

Heating oil tanks are unregulated by the NJDEP in New Jersey as they used to be called UHOTs (Unregulated heating oil tanks).   Work performed on abandoning an oil tank is governed by the New Jersey Department of Community Affairs (DCA) Bulletin No.: 95-1B. Discharges or leaks from these tanks are regulated by the  Department of Environmental Protection’s Unregulated Heating Oil Tank (UHOT) Program.

Let us not get ahead of ourselves.  First, to work on a heating oil tank in New Jersey you must be licensed by the NJDEP. The NJDEP certifies individuals and firms that perform services on unregulated heating oil tanks.  To be technical, N.J.A.C. 7:14B defines unregulated heating oil tanks as, “any one or combination of tanks, including appurtenant pipes, lines, fixtures, and other related equipment, used to contain an accumulation of heating oil for on-site consumption in a residential building, or those tanks with a capacity of 2,000 gallons or less used to store heating oil for on-site consumption in a nonresidential building.”

To say it in English and following a federal definition, an underground storage tank is defined as a tank the volume of which, including the volume of the appurtenant pipes, lines, fixtures and other related equipment, is 10 percent or more below the ground.

It is generally recommended that if you own out-of-service underground heating oil tank, it is a good practice to remove the tank.   Takes removed from service such as during gas conversions, rarely ever get placed back into service.   Tanks older than 20 to 30 years are also recommended to be removed as nothing lasts forever. Although tank abandonment is allowed, there has been an increase in previously abandoned tanks being removed. These tank removals are driven by insurance and mortgage companies that do not want the liability associated with underground heating oil tanks, as these tanks can leak and remediation can be thousands of dollars.   

New Jersey has construction codes and The Uniform Construction Code (UCC) covers oil tanks, but this code is not a retrofit code, and therefore, it does not deal with tanks that have been abandoned for extended periods of time. The UCC applies when a tank is taken out of service as part of a construction project or when the tank has become unsafe. If a project results in an underground tank being out of service for a period of one year, (such as an oil to gas conversion), as per Section 5704.2.13.1.3 of the International Fire Code (IFC), the tank must be removed from the ground in accordance with Section 5704.2.14 of the IFC or abandoned in place in accordance with Section 5704.2.13.1.4 of the IFC. If an aboveground tank is out of service for a period of one year, as per Section 5704.13.2.3 of the IFC, the tank shall be removed in accordance with Section 5704.2.14 of the code.

An oil to gas conversion is an example where a construction activity can trigger the need to address the oil tank.  In this case, the local code officials must ensure that the tank is properly removed or abandoned in connection with the conversion.*

* The only exception to this would be where the owner can demonstrate a legitimate continued use of the tank.

The removal or abandonment of a tank requires an application for and the issuance of a demolition permit regardless of whether it is in connection with other related work. In short, if you are removing or abandoning an oil tank you need a permit.

Oil tank removal and abandonment inspections are the responsibility of the of the fire sub-code official as per the IFC, Section 5704.2.13, fuel oil storage systems, as referenced by the International Mechanical Code (Section 1301.5) and the International Residential Code (Section M2201.7). Per N.J.A.C. 5:23-3.4.

Proper Abandonment Procedures are detailed in the International Fire Code, Section 5704.2.13.1.4, the American Petroleum Institute (API) Bulletin 1604, and National Fire Protection Association (NFPA) 30 Annex C relating to the abandonment of underground storage tanks. These documents, which detail procedures for tank abandonment are followed by New Jersey’s applicable regulation as listed in N.J.A.C. 5:23-3.6.

Tank Leak Assessment

The construction regulations are not clear regarding who, what, when or how the assessment of a tank for leaks is performed as it is generally not considered a construction activity.  The construction regulations do define that WHEN contamination is found it is to be reported to the NJDEP hotline at 877-927-6337 (877-WARN-DEP).  This is the bear trap owners of tanks face when a tank is removed.  NJDEP regulations chapter 26F HEATING OIL TANK SYSTEM REMEDIATION RULES  Statutory Authority N.J.S.A. 13:1D-9, 58:10-23.11 et seq., 58:10A-1 et seq., 58:10A-21 et seq., 58:10A-37.1 et seq., 58:10B-1 et seq., and 58:10C-1 et seq.  Date last amended August 6, 2018, state that:

"Upon discovery of a discharge, the owner shall immediately notify the Department by calling the Department Hotline at 1-877-WARNDEP (1-877-927-6337)."

Therefore, under the NJDEP requirements the owner upon discovering a tank leak must notify the NJDEP spill hotline.

Construction Permit Approval

The most misunderstood part of the tank closure process is the sign off from the local municipality.  As per the New Jersey Department of Community Affairs (DCA) Bulletin No.: 95-1B after tank has been removed and properly disposed of, and the excavation is filled with certified clean material, a certificate of approval can be issued by the local construction office and the permit can be closed out.    So once you follow the construction procedures the township can close the permit, if the tank leaked or not.  Again once, you remove and backfill the tank, the municipality is done with their job. Any remediation activity, including the removal of contaminated soil, will then proceed through the Department of Environmental Protection’s Unregulated Heating Oil Tank (UHOT) Program.

Does all this sound confusing?  It should not but it does and the layperson should not be expected to know these procedures or regulations but they are subject to them.

If you want clear-cut answers, call Curren we have been performing tank closures for over 20 years.   Thousands of completed tank projects have made us de facto experts on tanks.