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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.

It is not unheard of that buildings are built on top of oil tanks.  Definitely not a good idea, but the structure was typically built either before environmental regulations or without regard for the regulations, or the oil tank. 

Every oil tank that is underground and even under a building has the possibility of leaking.  When a tank leaks you may have to clean up the leak, which requires removing soils (soil remediation).  How do you do soil remediation when you have a structure over the tank?    The photo below is a garage, where the walls were supported and the floor and contaminated soil was removed.  

If you want to buy a house with a tank under the house or think of selling a house with a tank in this situation, think again.  The concern with oil tanks is they leak and if they leak you may have to clean them up and that can cost money.  I know a number of properties that owners tried to sell, but having a tank buried under the sunroom was a sticking point and prevented a sale.  The only way these houses went to the settlement table was by having the owner cut open and clean the tank and take samples to show the tank did not leak.  Yes, a project like this can cost thousands of dollars but these are costs that are the responsibility of the property owner even if they never used the tank and bought the house knowing a tank was under a structure. 

In practice, many tanks that are under a garage, house or porch we find are not leaking. Why?  Well because you have an umbrella over the tank being the structure.  The house keeps the tank dry which in turn inhibits rust.  Don't get me wrong some do leak, but the drier any metal is the more corrosion resistance will occur.

When decommissioning the tank, a confirmation that the tank did not leak can be acquired by soil sampling.  This entails entering and cleaning the tank of all residual petroleum compounds (liquid and sludge).  The empty cleaned tank can then be removed and soil samples acquired from the tank excavation.    But in the case of a tank under a building where removal is not practical, you can cut holes through the shell of the cleaned tank and obtain soil samples. 

So you see there is no reason you can't take soil samples from tanks that have been filled in place.  People who own tanks do not want to take soil samples because they may get bad results.  The saying goes if you do not test you have a 100% chance of finding nothing.

The photo series below is of a tank under the crawl space floor that was cleaned and tested.  The rub was that the tank leaked and remediation was necessary.  So contaminated soil had to be removed.

The tank was removed, and the soil contamination removed.  A picture is worth a thousand words.

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Licensed in Delaware  Pennsylvania & New Jersey

Why my filled in place tank has to be removed?

(aka Closed in place tank has to be removed to sell a property)

Every tank needs a report with testing to say the tank did not leak. Tanks abandoned in place avoid having testing performed which negates finding out if the tank did or did not leak.

Case in point, the above photo is a tank that was filled with foam.  You will notice that there are no access holes cut into the tank that would have allowed tank entry.  Yes you can see the large horizontal access hole Curren cut into the tank, but  no such hole was there before, which means the tank was never cleaned of residual oil.  See the oil in the tank and on the foam? You can see that to clean a tank you need elbow grease to go inside the tank, any oil left in a tank can leak in the future, hence why closed in place are removed.

Remember when people thought smoking was healthy?   There was a time when people and the tobacco industry didn’t openly speak of cigarettes as being unhealthy or addictive. This correlates to tanks that were previously filled in place without a “non-leaking certification”.   Few people want to find a problem, meaning their tank leaked, since problems have to be solved and that can cost money.   Oil tanks rust from the inside and out, and the cleanup of these leaks can cost thousands if not tens of thousands of dollars.

This tank was filled with sand, to absorb the oil in the tank, rain water filled the tank pushing the oil up and out into the soils.  $29,000 later the tank was removed and the soil remediated.

Many property owners either being naïve or savvy had their buried tanks filled in place years ago.  Believing or hoping that if they hired a company to fill their tank (not a DIY project) and getting a local permit in conjunction with township/municipal inspection the tank would never be an issue. Fast forward to today, same property is being sold and its owned by either the same people who filled the tank in place or a subsequent homeowner (who typically naively bought the property not understanding the tank liability) and now the buyer wants the tank removed and tested.

These are all reasons why today's buyers want oil tanks removed and tested, to prevent the tank from being an issue in the future.

Statements from property owners calling our office about their tank over the past 25 years.

1. I don’t want to remove the tank and find a problem, its legal to fill it in place, I want to do that.
2. Why do I want to test the tank and find a problem?
3. I want the tank filled in place, I don’t want testing.
4. My tank was filled in place but they put a camera into the tank before filling it in place.  (Absurd, but a few people a year say this)
5. My tank was filled in place and tested. (Unfortunately I can find the paperwork for filling the tank I just cant find the testing data.  (Because it was never tested)
6. My tank was tested before filling in place, but a different company did the testing and I can’t find the eating data.  (No one pays two companies to do something one company can do, unsurprisingly these people cant find anything regarding testing, contract, invoice cancelled check.  We call this unicorn paperwork, only the pure of heart can see it)
7. Removing the tank will disturb my prized lawn, bush, special tree, sprinkler line, flower bed, etc.   They never say it was a bad idea beautify the area above the oil tank.

A little history, in the 1990’s Federal regulations were established regarding commercial tanks (gas, diesel, kerosene, aviation fuel) and there were clauses where a commercial tank could not economically be removed that the tank could be filled in place, AFTER holes were created in the bottom of the tank allowing soil sampling for leaks to be obtained.  

These regulations created a tank removal/closure industry and established standards for tank removal and closure in place, these standards said evaluate for leaks, do testing, document (draft a report of the work), report leaks to appropriate government environmental agencies.   So companies doing  tank closure had a Standard Operating Procedure (SOP).

These photos show coupons (holes) cut into bottom of tank for soil sampling.

Now these testing regulations didn’t apply to residential oil tanks, but there was an awareness that if a leak was discovered it was reportable and cleanup maybe necessary.  So property owners circumvented the proper course of action and instead of removing a tank, and potentially finding holes in the tank or smelling oil impacted soil, they chose the route of tank abandonment in place. While I can comment on every company doing tank work, but I am sure many recommended sampling due to future real estate transactions, but in the end, the companies get paid for doing tank work with or without sampling so you have thousands of tanks that were filled in place without testing that now have to be dealt with in a real estate transactions.  

We can personally  attest that Curren has always suggested soil sampling for tank removal or closure in place, some people deferred this testing.  About 17 years ago we made it policy, Curren won’t work on your tank if you don’t complete sampling.   We took this stance so property owners didn’t get stuck in a future sale and so people didn’t stick another person with a leaking tank. Unfortunately this was not followed by other companies.

Some 40% of tanks we have removed were tanks previously filled in place, so believe me if you have a property with a tank that was filled in place without testing, you will get it removed if you want to sell the property. 

No you can't climb inside a tank when filling it in place and see pin holes.  Ever get a flat tire?   Did you see the hole?   See the photo below?  This tank was removed, do you see any holes in the tank?

Well there were a few holes that were apparent after the dirt was scrapped off the tank.  If this tank was filled in place and remained in the ground, there holes would not have been apparent if the tank was not removed.

Many people like to present the local permit obtained for abandoning the tank.    People somehow think the approval from the town means the tank didn't leak.  Please note that no your local permit which the town approved for filling the tank in place doesn’t certify the tank didn’t leak!  It certifies you filled a tank in place with or without testing (which while legal, makes it harder to sell, ahem near impossible to sell)  mortgage companies, insurance companies and attorneys for buyers will have a hand in preventing the sale with an inground tanks.  Too much liability, unknown cleanup expense is what causes the hesitation.  No one knows if the potential tank cleanup is $10,000.00 or $120,000.00?

If you own a house with an abandoned untested oil tank, expect to either have the tank removed, or the prior work to be reverse engineered, meaning all the material in the tank removed, holes cut in bottom of tank and soil ampler obtained, then the tank back filled again.  We just did this for a tank filled with foam under an addition, so yes it happens.   Buyers will want the know if the tank leaked, trust me if you were buying a property with an abandoned tank you would want to know the same thing. 

Have a tank question?  Call the experts