Does the owner of the property have to be made aware tanks weep is being performed?

A tank sweep is a form of due diligence, like a home inspection, every seller has to allow inspections, although they don’t have to agree to fix anything.  Every seller should be aware that the buyer is paying for these inspections, so they are aware these items are a concern.  Nobody likes to be surprised by problems, which inspections by nature are looking for.

The owner should be aware we are doing an inspection specific to oil tanks because if we find a tank we want it removed and I was told they have no knowledge of any oil heat.

Do you need to go inside the building during a tank sweep?

100% you have to go inside the building and inspect for evidence of prior oil heat.  Anyone not going inside is doing an incomplete inspection. To provide a thorough tank scan, Curren needs access to the basement heater room during the scan and no cars in the driveway.

An oil burner switch and an oil burner fuse inside the door are both clues that are indicative of oil heat.  Curren also sees "cut outs" in the flooring of the basement, or lines sticking out of the flooring, both are clues that an oil tank was present on the property at some point in time. 
 

Speaking of visual assessment as part of a tank sweep, one of the photos below suggests an oil tank the other is 100% not an oil tank.  The trained technician knows the difference.

What happens if you find an oil tank during a tank sweep?

When a tank is found the owner/seller must be informed of the tank and that it needs to be removed and tested to verify no leaks.  But it goes deeper than that, a cascading series of events occurs.

1. The settlement will need to be pushed back typically a month or more as you need time to get permits, remove the tank and get soil sample results. Example: We just had a tank located and removed prior to the settlement they pushed back settlement twenty days on day fourteen we removed the tank and it leaked, now the leak is reportable to the state environmental agency, and you will have to do reporting to the government, which takes time.   As we waited a week for the test results, the settlement was not moved back any further, three days before settlement we get all the test results 100% failure and soil remediation required. The Realtor, mortgage company, and buyer were like deer in the headlights as there was no backup plan.

2. Find a tank, the seller must address the tank for the buyer or cancel the contract and disclose the tank to all FUTURE BUYERS, meaning updating the Disclosure Statement.  A Realtor must update the listing referencing the tank. Example: had one where we found a tank, the seller canceled the contract, and got a new buyer but NEVER DISCLOSED the tank.   Buyer found tank AFTER PURCHASE.   Man, the number of attorneys and people getting sued was large and the buyer walked away winning.

3. Find a tank, and see if the seller will take care of it because as you have just read, they need to do the right thing.  Buyer can push back settlement until at least the tank is removed and soil sample results are returned, and it can be determined if remediation is or is not required. Example: Had this situation occur, but the tank was found under a deck, buyers paid for soil testing where we could test, and contamination was found.   We found cancer, but the extent was not known because the deck prohibited access to drill test borings.   The buyer and seller came to some financial agreement on the purchase and the buyer got monies back or off the purchase price.   We remove the tank and performed a remediation, but the contamination was extensive, and the buyer needs more money to clean up the leak but the seller is saying they agreed on an amount and no more funds will be provided.

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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So many people continue to use Underground Storage Tanks (USTS), with the belief that the tank is in 100% working order, meaning no leaks.    How do you know if your tank is leaking -   Ninety-nine percent of the time you have no idea if your underground oil tank is leaking.   Let's be real, your smoke detector chirps when the battery is low, does your oil tank have an alarm or notification system?

Case in point, the following photos show a tank that is in use and was being replaced with an Aboveground Storage Tank (AST) for a future real estate transaction.  The photo below shows the tank fill pipe poking out of the ground about 18" high and in front of the rear stairs, pretty obvious a tank is present.

This tank gets removed, and we find that the tank was filled with oil, this oil was going to get transferred to the new AST.

So again, tank was being removed proactively, no signs the tank was leaking.  Tank gets removed, soils are a course sand.

Here is the tank out of the ground after removal.  What you need to note on the tank is the wetness on the top of the tank in the photo.  To you you see the top, but it is the bottom of the tank.   The wetness on the bottom of the tank is actually oil.   Note how soils are sticking to the tank.

So if you were on site and wiped you hand across the wetness, it would feel slick and smell oily.  Almost dead center of the photo below you can see the corrosion hole in the tank, almost big enough to put your finger through.  Now this hole was not always so large, it started as a pin hole, working through the tank as corrosion removed layer after layer of steel.  Once the hole advances through the tank shell, oil drips out, saturating soils, causing the soil to bind to the tank and form a plug that slows the oil leak, but does not stop it.

This tank, which was holding most of the oil, was slowly dripping oil for years.  The owner had no idea, because the hole was at the bottom of the tank, so water would not enter the tank and shut off the heater, the oil loss were drips, not dozens of gallons a day.  If you lost 70 or 10 gallons, you would notice, ounces a day, goes unnoticed.  Don't believe me?  Answer these questions.

• How many gallons of gas are in your car right now?
• When did or does the warranty on your car expire?  Oh the expiration of the warranty on your oil tank?
• Wait, does your oil tank have a warranty?
• How old is the tank?  Did the old owner replace the tank?  If so when?  Did you even ask?
• Do you have any salad dressing in the refrigerator that have expired?

Not trying to be funny, just making a point, that you don't pay attention to the mundane.   When your computer hard drive crashes, its a catastrophe,   well the same goes for your oil tank.  Rust never sleeps and the majority of tanks are well out of warranty and even farther out of the engineered design life expectancy.

Tanks are out of sight out of mind and people think they have a handle on the tank being in good condition, they think oil usage is normal no water in the tank are all signs the tank is not leaking.  Well water enters only of there is a hole in the top of the tank that would allow water to drain into, oil usage you only notice sudden drops in liquid, which is not the norm for a tank leak.  To be fair commercial tanks have expensive electronic leak detection systems, residential tanks do not.  To think you have a grip on how much oil your using, it giving yourself a little too much credit.

Some advice for knowing if your tank is at risk of leaking.

• Is the tank under warranty?
• Was the roof replaced?  If so the tank should have been replaced?
• Are you placing anything in the tank to prevent corrosion from the inside?
• Do you get the tank leak tested every year?

A no to any of these questions means you should replace the tank.  You can install a new Aboveground Tank that has a 30 or 40 year warranty, yes they cost money, but less than having to remediate a tank leak.  Tank leaks cost tens of thousands of dollars.

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