24 Replies

Thanks in advanced to those who can help guide me through or shed some light on the following scenario. What would you do?

My wife and I are looking into buying our first duplex. Its in a desirable area which can bring in good cash flow after we move out to our next home. The roof needs work but for the most part the home is move in ready. The asking price is $390K.

The situation:

In-ground oil tank within a basement crawl space, which has been given a clean bill of no leakage by a third party and is in a Category A flood zone. The home owner is unwilling to remove the oil tank. I probably can negotiate for a lesser price of the home, BUT, is the risk worth the reward?! How can I lessen the risks? What can I do besides the obvious getting ground tested? What if the seller will not allow me to test the soil?

Additional note: The seller's realtor claimed that the tank was no longer in use ,but upon further inspection from our realtor the information was deemed misleading.

Thanks again for the input!

While it's not a Zone 'V' location, did you factor-in the potential costs of buying a property which lays below the base flood elevation?

But back on-topic, if the oil tank is no longer in use, does it still contain oil?   What are the local and state regulations and legislation - i.e. does the tank meet current requirements (i.e. double skinned, protected from soil contact, etc, or does it need to be remove and/or replaced?

Ultimately if the tank is no longer in service, it should be removed to mitigate the risk of future problems (contamination or simple an inability to sell the property).  Is the issue that the owner does not want to bear the {potential} costs of removing the tank or they are simply unable to deal with the logistics?

In situation such as this, we would normally make the removal of the tank a condition of Close and try to compel the Vendor to have it removed.   Failing that - and if the lender has not made the removal a condition of financing -  we would either walk away or, if the deal is attractive enough, would offer to handle all the logistics of having the tank removed at the Vendors expense.   This would start with securing estimates for both removal of the and any possible remediation of the soil in which is was buried.   We would then share this information with the Vendor and proceed to Close with sufficient funds to address the highest estimate retained in escrow.   The work would then be performed and paid from escrow.  Once complete, inspected and certified as clean, any funds remaining in escrow would be released to the Vendor.

I recently went through a similar scenario here in NC with a commercial property that was previously a gas station. The old tanks were still in the ground, and completely full. The seller claimed to not even know about the tanks' existence. I had the contents tested, they were filled with 100% water. The soil around also checked out. I used the tanks as leverage to negotiate a much more favorable deal with the seller and everything worked out great. I learned that unused tanks can be removed, or filled with water, foam or concrete. All are acceptable and legal methods, providing nothing leaked. If any old fuel had remained, I would have had to pay a disposal company by the gallon to pump the tanks and discard the fuel appropriately. Verify that the tank really hasn't leaked, have a soil test completed and use the entire ordeal as leverage to negotiate a better deal from a seller who misrepresented their property. Just my opinion of course, based on my experience. Good luck!

Is it buried or just a tank in the crawlspace ? It doesnt sound like its a problem 

@Roy N.  thanks for he reply. Just to clarify.  Is the vendor my mortgage company?  If so, I already know that they will not offer me the loan on such a situation unless the oil tank is removed.  The oil tank is in service and a leak test was done which it had passed. 

In Washington state there is a free state insurance program. Look for resources that can mitigate the risk, but be sure to do it before closing.

@Seth Borman I’m looking into that right now. I was hoping that someone has had experience with working through this situation. 

Christopher Velijkovic, here in the south buried oil tanks from the 70's and 80's are a pretty common thing to encounter, so they honestly don't scare me very much anymore. I understand that it passed the leak test (I'm assuming they used a pressure test or some similar method) , but I would recommend still considering a soil test. I have heard of cases where a tank had had a small leak in the past, but then closed back up via corrosion, etc. I understand that its uncommon, but still a possibility to consider. Could be more trouble than its worth though, being in the crawlspace. Hope it works out well!

If there is no leak , and no oil that has spilled , you would abandon in place . Remove any oil left in tank , remove the fill and the whistle and you are done 

This is super common in New Jersey.  Is it in ground or in the crawl space?  No leak?  I would imagine a soil test shouldn't be an issue with the seller.

@Ian Walsh we are trying to make the seller take responsibility for this. Only because of the flood zone aspect.  But we are placing a “subject to” as of now.  Thanks for the reply. 

@Matthew Paul I wish it I could leave it and fill it up with sand. Unfortunately My mortgage company will not lend me the funds until that tank is out of the ground. 

If its that good of a deal , and the homeowner wont do it . Break out a drill and a sawzall and start cutting . Its cold so it wont be fun . Take garbage bags and lots of old towels because oil tanks are never " empty"  

Originally posted by @Matthew Paul :

If its that good of a deal , and the homeowner wont do it . Break out a drill and a sawzall and start cutting . Its cold so it wont be fun . Take garbage bags and lots of old towels because oil tanks are never " empty"  

In this situation, I'd probably opt to hold-back funds in escrow to pay for a "professional" to remove the tank, perform any cleanup and "certify" all is good (making the lender happy).   Whatever was left over would be released to the Vendor.

What are these oil tanks for? Never heard of this besides a gas station...

Thanks in advance!

@Roy N. well just place a bid with “subject to” in place. I’ll see what happens!!  Thanks everyone for your help!!

@Jacob Caddick it’s for heating the home if there isn’t natural gas utilized or near the home. 

@Matthew Paul if all works out well I’ll have them pay for it but I’ll do it myself. Thanks. I helped my brother with his tank few years back. Messy!!

Geez, I don't think you can tackle this yourself, not if everyone already knows about it. To my knowledge you cannot buy/sell a house in NJ that has an underground oil tank. The lender typically will not allow it. There is a process and the state is involved. We just did a house with one of these. I was told over the phone that it would cost absolutely no more than $1200, no problem, guaranteed. Then we discovered that there was already an open case number for this tank on file with the state and the state required soil testing, at an additional cost of $5000. Oh well. But now we have certification from the state inspector and laboratory that the tank has been removed and the soil is OK. Any future buyers will want to see this too. We used Statewide Environmental Services LLC in Raritan NJ, they took care of everything.

@Jennifer Petrillo thanks for the recommendation. I will keep them in mind for the future. Your absolutely right, my lender will not fork over the funds, especially now that the buyer refuses to remove the tank after the offer was placed with the “subject to tanks removal and/or soil inspection”. Unfortunately the reward is not worth the risk at this moment.  However, thanks for your knowledge and referral. 

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