Flipper · South Orange, NJ · Member since 2017 · 14 posts · 7 votes
Hi Everyone,
I purchased a property to flip about a year ago. Prior to purchase, as is customary in NJ, I had a tank sweep company come investigate the property. They indicated that there were no oil tanks on the property. Fast forward a year later, we get an offer and the new buyers find an oil tank as part of their pre-purchase inspection. I was completely shocked given that I had paid to have some one to look for a tank. Anyway, the tank sweep company said they don't do oil tank removal and to take matters up with their insurance. The adjuster says over the phone that they do not think the tank sweep company should be responsible for any removal costs which could go into 5 figures. Has anyone else had this problem? How should this be handled? Any advice would be greatly appreciated.
@Michael Lear I would pursue them for the full cost of removal due to gross negligence on their part. The only service they were contracted to provide to you is finding tanks. They did not perform the function. Other professionals can attest that had they done the scan, they would have found it. My guess is they were in a hurry and skipped the scan or they had a bad battery or some reason it didn't get picked up. Of course their adjuster is going to try to avoid responsibility. Get an attorney and have signed statements from the professionals.
Think of it another way. If I got in a car accident due to running a light by accident, would I be responsible for the damage that occurred? Mistakes have consequences, tell the weasel insurance adjuster that.
Pull out the paperwork you signed with the first company, but I would imagine they have liability for any losses for sure. If they are passing along to their insurance company, they know they have an issue.
I've already gotten my money back, but this is a much bigger issue.
I relied upon their "expertise" in finding a tank before making my decision to purchase. Had I known there was a tank I would have a) not purchased the property (I passed on several properties because I didn't want to deal with an oil tank) b) had the owners remove it at their expense or c) would have asked for a significantly discounted purchase price to account for the risk.
Hi Michael. I'm sorry to hear about your situation, I'm sure it is very frustrating! I think it would be best to contact an attorney and see what he/she has to say about the situation. Considering the potential costs you mentioned are so high, I believe it is worth it to contact a professional.
Sorry to hear you are experiencing this. It will be based off of the documents you sign. I would guess that they have a paragraph clearing them of not finding a tank and limiting the damages to the cost of the sweep (Like a home inspection). If that document exists the insurance company will have a copy and the odds of them offering to pay for it would be slim to none.
Yes, that's a professional liability exposure, and it would count as an "error or omission." I agree with everyone here. I would imagine they've made you sign a waiver for such occurrences, but their E&O coverage should cover this. Its certainly worth investigating. This isn't an obscure "deal breaker," potential tanks are exactly why you hired them.
"Contact ALL the local media, safety issue, health hazard, poor customer service, undue burden... .get my drift"
So essentially put a scarlet letter on his own property that can be found for years to come? Alert the world that the property he has is an environmental mess? The problem with the scorched earth strategy is that when this buyer walks, anyone else doing any due diligence is going to see the whole "Undiscovered oil tank is costing me millions, I wish I never bought this property" articles all over. Nothing lowers the property value more than environmental cleanup and advertising it is not going to help.
@Michael Lear
Do you know WHY they didn’t find it? The typica test includes a magnometer (super duper metal detector) as well as looking for signs of a tank (vent or fill pipes, cemented over holes in the foundation wall where the lines came in, etc).
I would think this would provide more ammunition against their E&O if they blantantly missed something.
On the other hand, it it was buried 8’ deep, or 50’ away from the house, etc. that is a better reason they didn’t find it.
Not a lawyer, but I would think you’d have to prove that they did their job poorly, as opposed to ‘anyone could have missed that’.
This tank was in a completely obvious spot, they used a magnometer and they totally missed it somehow. The yard is tiny and the tank was right in line with the heating unit about 10-15 feet away. I’ve had three other people out, including the original company that did the scan and nobody can believe they missed it. So the “WHY” would be gross negligence.
@Michael Lear I would pursue them for the full cost of removal due to gross negligence on their part. The only service they were contracted to provide to you is finding tanks. They did not perform the function. Other professionals can attest that had they done the scan, they would have found it. My guess is they were in a hurry and skipped the scan or they had a bad battery or some reason it didn't get picked up. Of course their adjuster is going to try to avoid responsibility. Get an attorney and have signed statements from the professionals.
Think of it another way. If I got in a car accident due to running a light by accident, would I be responsible for the damage that occurred? Mistakes have consequences, tell the weasel insurance adjuster that.
"Contact ALL the local media, safety issue, health hazard, poor customer service, undue burden... .get my drift"
So essentially put a scarlet letter on his own property that can be found for years to come? Alert the world that the property he has is an environmental mess? The problem with the scorched earth strategy is that when this buyer walks, anyone else doing any due diligence is going to see the whole "Undiscovered oil tank is costing me millions, I wish I never bought this property" articles all over. Nothing lowers the property value more than environmental cleanup and advertising it is not going to help.
Just my 2 cents.
They don't typically post the address or much info
Professional liability insurance covers this process. Any legitimate Environmental Consultant will carry the insurance. You will have to go after their insurance carrier to cover the claim. Take a look at the proposal they sent you in the Terms and Conditions to see if they limited their liability to the cost of the investigation. Consultants typically will do this especially on a small job, but at the end of the day a good Environmental Attorney should be able to get the cost of the removal of the system and any impacts covered.
You said they gave you your money back, if you cashed the check you may be limited to your claims. You are looking at $4000 to $6000 to pull and close the tank system assuming no major impacts.
@Michael Lear obviously “getting your money back” isn’t sufficient but I doubt the removal cost and the actual damage of their failure should exceed 10k. Unless it has a bad oIL TO SOIL leak an oil tank eccavatIon aND removal shouldn’t be near that expensive . Normally they just give a certified decommission by filling them with concrete or sand and leave them buried.
Two issues. Is the inspector liable for damages? Then, how to get this resolved to get the deal to progress.
I am not familiar with NJ regulation of oil tanks, but here is a breakdown of how the bid should go. $800 excavator and operator, $400 oil "disposal" (likely involving them reselling at a profit). Cleanup of contaminated soil could be more, but is fairly rare. For residential there is no certification process to be adhered to to guarantee the soil is not contaminated. I am not sure what NJ laws are.
Now that it is identified, can you determine how much fluid is in there? I would call every oil removal service in the area to get it pumped, the quotes in my area varied over 1000%. The same with the tank removal, the quotes were between $1,000 and $10,000. Basically the large commercial companies do not want to deal with it. There was only one or two companies that did this sort of work on residential tanks and their prices reflected that it was not a giant tank in the ground running a shell station.
This tank was in a completely obvious spot, they used a magnometer and they totally missed it somehow. The yard is tiny and the tank was right in line with the heating unit about 10-15 feet away. I’ve had three other people out, including the original company that did the scan and nobody can believe they missed it. So the “WHY” would be gross negligence.
Exactly. Don't worry too much about your contract with them, because even if they have you supposedly sign away your rights those rights don't just disappear. For example, if it were that simple, doctors could just have patients sign off that they might die or be injured during surgery, and there would be no need to spend multiple digits of expenditure in malpractice insurance and we could visit a doctor for $50.
Go after their insurance. Maybe even your title insurance from the purchase?
@Michael Lear
I’m a commercial broker in chicago. Currently going through something similar myself. No Tank, but with Ground Soil Contamination (petroleum) from a neighboring property. The buyers lender wanted (and was given) a $78k holdback per phase3
NJ law is specific - the contract you had with the company should have some attempt at limiting their liability, but epa law will likely prevail. Its worth consulting an attorney.
I assume there was never an EPA Phase1 done on this property?
@Michael Lear - Hey Mike, sorry to hear about the oil tank issues. When buying my property in Bayonne, the owner of the property had a sweep done 7 years before and did not find a tank. As you have to do in NJ, I had a second opinion and found a tank prior to purchase. The tank was decommissioned about 10 years earlier (& oddly filled with cement) but upon removal the bottom of the tank looked like swiss cheese leaving the soil contaminated. In my experience, clean tank pulls cost about $3-4k. Contamination are a separate beast (could contaminate the water & cost a fortune). When getting estimated of the bill make sure any additional work outside of the removal is included in the costs (i.e. Police pay & re-cementing after removal). The estimate I received said they never had a tank pull cost more than $14k in the 30 years they were in the business. Thus, I agreed with the seller that he would pay from 0-10k, I would pay from 10k-14k and he would pay anything above 14k. Low and behold, the "tank removal" cost 14k but the additional work brought the total to 18.5k. I hope you have some luck with the tank sweep company, unfortunately the seller was not able to get any coverage from the previous tank sweep company (they went out of business).
The tank was pulled last week. Unfortunately, it had holes and there was contamination that has to be remediated. So far, we are looking at about $11,000 before landscaping to bring the property to prior condition. Now I have the fun work of chasing down the insurance company for payment.
@Joe Splitrock We going after their insurance now. What a PITA! We had to delay closing and now I have to spend hours dealing with an adjuster. What a mess over something so simple!