found out multi-family has UST. What to do?

Question

Offer got accepted and now in the contract state. It was just disclosed that property has an underground storage tank. What would you do?

Ned Carey · Answer

I would use it to renegotiate.  If I moved forward on the deal I would figure the cost of digging the tank out as part of my financial evaluation.

Roy N. · Answer

Peter Fokas

Removing it is simply a matter of installing new tanks - either inside the building or a double-skinned fiberglass tank outside  - changing the connection; draining the old tank(s); then removing the old tanks.

Not really more complicated ... a little more expensive ... all the more reason to have it done before taking possession.

Peter Fokas · Answer

Turns out this UST is actually in use so simply removing it is not so straightforward. Any recommendations?

Peter Fokas · Answer

Thanks for replies. I did not consider the holding in escrow option so this is helpful details.

Roy N. · Answer

Peter Fokas

If it is a 4-plex, then the tank(s) are likely small (100 - 200usg).   Are the USTs still in use?  Do you know the age - i.e. are they steel (double walled) or fibreglass?

Here a 4-plex would be considered residential and the lender would not require a Phase I EA.   That said, USTs are no longer permitted.

As Ned Carey & Joel Owens have indicated, I would make the removal of the tank(s) e negotiating factor in the deal:  either the Vender removes the tanks and handles all remediation {you will want proof it was done professionally and there is no soil contamination (or non remaining)} or you handle it but reduce the offer accordingly.  It will be easy to get quotes for the cost of removing/replacing the tank(s), but more difficult to get a quote for any remediation ... you may want to hold a portion of the purchase price in a separate escrow to cover any remediation; releasing the balance to the vendor once the job is done.

Peter Fokas · Answer

4 unit.

Roy N. · Answer

How big is this multi-unit?  Is it commercial in size (5+ units)?

With this disclosure, you may have to undertake a Phase I Environmental Assessment  - your lender or insurer may insist on it.

We had a very similar deal on a multi-family a year ago - when the Phase I and some soil sampling came back strongly indicating remediation, we - and our lender - insisted on placing a substantial portion of the purchase price (30%) in escrow to cover remediation costs.   The Vender woud have none of this and the deal fell through ... six months later they had to remediate anyway.

Joel Owens · Answer

It's not just if the tank has a leak it is how long has it been leaking?? If the ground is contaminated and goes way down they will have to keep taking dirt out and checking until the contaminates are no longer found.

The more that has to be fixed the more the costs go up.

Joel Owens · Answer

See if the seller will cover the cost to have the tank inspected for leaks and contamination during your due diligence period.

No legal advice.

Peter Fokas · Answer

How do u go about finding out if there is a leak and contamination prior to actually owning it? That is only way to figure out cost?

found out multi-family has UST. What to do?

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