Underground tank removal - under DABO

18 Replies

Hi everyone have a 2 family under attorney review in Bayonne, NJ. During review attorney passed along that a there's a decommissioned underground oil tank, I saw reports/permits from state of that. I asked my attorney to request seller to remove oil tank and seller came back that they're prepared to remove oil tank and remediate any contamination but requesting to buyer (myself) to contribute 50% with a cap of 5K. So it removal is 2K ill put 1K if the removal is 20K I put the max of 5K. This is my first house hack and never dealt with this situation, and don't want to incur with any other expense from beginning when I could be using this money towards improving the rental unit. Curious if other investors faced this issue or have experience in this matter. What do you think a worst case scenario would cost in Bayonne? What about your best case? Im thinking of requesting 100% of the cost to be on seller side as I dont want to get into a bigger problem down the road, also not considering the timing of tank removal in regards to closing. Would appreciate any input.

@Eric Gomez I removed 2 oil tanks in NH last November and the total cost for both was $5700. It wouldn’t have been half that for 1 but probably like $4000. My equipment came from 2 hours away 3 large trucks and 6 men on the payroll for the 4 hour round trip drive. I would think your costs would be cut some from that but your hourly rates might be higher so might be about the same assuming nothing goes wrong.

Hi Eric,

I would push back if I were you and have the seller handle it.  Oil tank removal and remediation should be the seller's responsibility, not yours, UNLESS you're a very experienced investor getting a tremendous deal sold strictly "as is" where you've waived all your inspection rights.

The worst case could be significant soil contamination requiring thousands of dollars in remediation, followed by soil and ground water tests by the state of NJ.

Thanks for the input @Max Vishnev . I did push back and requested to lower my cap down to 3k, also adding a timeframe to this otherwise I can walk out of deal, also requested a NFA from city in order to proceed. Im expecting 30 day delay to closing (if all works fine) think that is decent?

So far its in sellers court waiting for my counter offer of cap and see if they accept. Thanks again.

@Max Vishnev That's why Im still negotiating with seller, house is in great condition (still pending inspection for details of course) and great for a house hack and as you said long term buy and hold. We'll see how this ends and fingers crossed because its a decommissioned tank there is no contamination and its an easy removal and fill. Thanks again, hopefully we'll be neighbors soon and get together for a coffee or so - sounds good? 

@Rob Glasser that sounds like a plan, lets do that meetup! If things go well will be closing in September so we'll be neighbors. I do have plans to continue growing my RE portfolio so would like to connect to explore lending options and so on.

Please keep me posted regarding the details of the tank removal you had.

Im really hopping there's no contamination because its a decommissioned oil tank, but we'll find out soon.

@Rob Glasser oh wow!! Seller accepted my counter to go 50-50 but I have a cap of 3k, whatever goes above will be on his behalf. Well really hope this goes well for all parts (seller and myself the buyer).

Thanks for this intel, very useful!

Originally posted by @Eric Gomez :

@Rob Glasser oh wow!! Seller accepted my counter to go 50-50 but I have a cap of 3k, whatever goes above will be on his behalf. Well really hope this goes well for all parts (seller and myself the buyer).

Thanks for this intel, very useful!

Good for you - just make sure you get that NFA from the city/state though.  That is what will limit your downside risk.  It isn’t really about the removal cost so much as it is about the potential soil decontamination liability.  That’s where things can really get out of control.  With an NSA letter, 3k max downside is very reasonable 

@Eric Gomez NFA's take a long time to arrive, so keep that in mind if you're in a time crunch and need to close sooner than later. In many instances when an NFA is pending the transaction is closed and the seller leaves a large escrow (usually from proceeds of the sale) which is then released back to the seller after you receive the NFA letter.