The house I am buying has a leaking oil tank, what do I do?

This is a common question, and the situation that leads to this point is 100% the same and divided between these two scenarios:

• Oil tank was out of service and owner did not remove it and left it to buyer to test for leaks and that is how it was discovered that the tank leaked. In this situation the seller is sticking the buyer with the problem and the buyer has spent money to find the problem. An oil tank is out of service because it leaked or the heater failed and the owner got the heat back up and running (new tank or conversion to another fuel source and left the tank to be a problem when they sell.). Think about it if the heater dies do you think maybe both the heater and the tank have reached a useful life and should be removed?

• The tank is still being used and its old and likely is leaking. Why? Because in 30 plus years never has anyone supplied information that the oil tank has an expensive leak detection system, corrosion protection or a warranty.   People think a metal tank in the ground will never rust or fail, it boggles the mind.  So they sell the house with a 50 year old tank, think they have never lost any oil.  fact, if you did not have a fuel gauge on your vehicle, you would run out of gas.

Buyers of properties with oil tanks are forced to test the oil tank, as part of their due diligence.  90% of the time the buyer finds that the oil tank leaked by testing the tank.

How do you test an oil tank on a property you are buying?

To test a UST you define the orientation of the tank and bottom depth of the tank, and you drill around the tank and collect samples for laboratory analysis.  

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First know the cost is not cheap and often times comparable to tank removal. To property test an underground Oil Tank, you would spend close to $2,000 because the approach requires acquiring soil samples from the ground around the tank, which give you quantifiable data regarding oil levels in the soil. There are permissible amounts of oil that can remain in the ground.   Note that when you soil sample a tank you are doing so around the tank so oil levels will be higher below the tank as holes in the bottom of the tank are always the first holes to form. The oils levels around the tank give you a snapshot of how bad the oil leak is but not a 100% picture, think of it as finding a cancerous tumor, that is bad but it can be worse depending on how far the cancer has spread. Think of the oil test as telling you benign or not meaning cancer.  If you test positive for cancer or the tank tests positive for a leak, you now need to know how bad the leak is. .

Spending thousands to test a tank is a big expense since a buyer is also sending other money on other due diligence for the purchase such as a home inspection, radon testing, etc.   Because buyers and many many realtors do not understand the tank testing process and the multiple What If scenarios that occur when you a find that a tank has leaked, drives people for the sub $1,000 test. This test will not have any soil testing so you have zero idea of actual oil levels and will be completed manually (drilling equipment allows soil borings to go deeper and through geology a manual hand auger cannot. Often this work is completed by a consultant working out of there house, with limited resources and anxious to make money on remediation. You will also find companies do this testing then refer you to another firm (typically common ownership) who is also anxious to remediate the problem.

Here is the rub, the buyer incurred the cost to find a problem, which really the seller should have done. I blame sellers trying to pass the buck and seller realtors not informing sellers of the myriad issues you have selling a home with an oil tank.

That said, you have a leaking oil tank at the house you are buying. Trust me you still want to buy the house, do not run away. What you do not want is to be responsible for cleanup of the oil tank leak. At this point you do not even know how much it will cost to remove and remediate the tank leak. You think What is the Worst case for a tank leak cleanup?

Buyers ask, what is the worst case for an oil tank cleanup.  These photos show what can be your worst case.

This house had to be supported with steel beams to allow equipment to drive under the house to remediate the tank leak.

This house had oil contamination deeper than the foundation.  Not enough room for steel beams, so we have to install helical piers to support the house.

Curren defined the contamination from the tank which went under the house.  The house had to be demolished to remediate.

This was a small remediation, house needed minimal support, but you can see how the footprint of the work area impacts the property.  This remediation was only $44,000.   But the landscape restoration was several thousand as ornamental trees and bushes had to be replaced as well as a new lawn and sprinkler system restoration.

How do you determine cost to remediate a tank leak? Think biopsies when you have cancer, you must define the extent of the contamination, called the plume. You will spend up to $5,000 on average, maybe only $3,000 to obtain a map of the contamination because now you must have laboratory analysis defining oil levels, which a group of samples could be $1,000 in itself. If you get a quote under a $1,000 for example 100% you are not getting good data and expect costs developed from this work to either be too much or have cost overruns. With data, you get what you pay for.

Who pays to determine the cost of oil tank cleanup when selling a home?

The buyer is the ultimate RP (responsible Party). Their property, their problem. Do they want to spend the money to determine how much clean up will cost? Vast majority of the time, no.  They want to sell the house and the problem, maybe they offer some token sum of money as a credit as part of the sale, but invariably is not an amount equal to what it would cost to cleanup. A $10,000 credit sounds good, but if remediation cost $51,000, it is not a fair reimbursement.

To be fair if property is in an Estate, the executor or executrix will want it defined, because they understand the need to remediate so they can sell the house.   A typical seller no. Do I recommend a buyer spend the money to define remediation cost? Maybe, maybe split it 50/50 with the buyers 50% coming off the sales price and an amended sales contract that seller is paying for remediation or again buyer gets credit for the cost of remediation. Sorry our advice is based on tens of thousands of projects with leaking tank and is meant to protective of buyers and fair to sellers. Know this an agreed upon price was settled upon before any due diligence was completed. Tens of thousands of dollars in remediation was not factored into the fair market value of the home sale.

Here is a special factor when you find a home has a leaking tank, maybe the owner already knew? It happens, it happens a lot. We have so many cases where we test a tank find contamination and eventually find the seller knew about it but was hiding this knowledge. Beware this scenario, because you are dealing with a party that is acting unethically.  They are hoping that the years that have passed since they discovered the leak will have made the oil disappear and a buyer won't look.

Trust me we get people who are very ethical, they had their tank removed 15 years ago, it leaked and now they are selling, and they want us to test the ground.  80% of the time remediation is need.  100% of the time oil is in the ground, oil is a complex hydrocarbon, like a twinkie, it does not readily degrade.

How do you buy a house with a leaking oil tank?

The leaking oil tank is a financial expense, as the contamination devalues the property and can also prevent a buyer from getting a mortgage.

if a tank leaks, you must determine costs to remediate meaning spending money to diagnose the leak.  Only after you define a tank area of contamination can you develop costs to remediate.  Once you have these costs you know have a BUDGET to remediate and yes every remedial estimate should be considered a budget.  This si because if you need to perform any kind of structural support to the house, you hope the foundation is in a condition to be supported.  We have had countless jobs where we must support or deepen a foundation only to expose the foundation and find it is deteriorated, cracked or missing a key component, meaning a footer.  This now requires additional engineering to strength the foundation for support.

While there is no law prevents a buyer or seller from transacting a contaminated property, most every project we have worked on where the buyer bought the home and obtained money from the seller for remediation, the buyer later regrets their decision.

Environmental Experts

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