I am under contract for a multi-family in Pawtucket, RI and we are hammering out the details post-inspection. The seller is pushing back on lots of the repairs I am asking for and I don't want to ask him to remove the oil tank no longer in use, but my father seems to think it's a terrible idea to leave it. I have viewed many houses with oil tanks no longer in use that were capped and they weren't a problem. Both of my realtors said it should be fine, but I wanted to get feedback from you folks. What do you think? What's your experience? FYI is was used this winter when they had to shut off gas due to separate circumstances.
@Jeremy Trier Is the oil tank being used or not? It sounds like it is a back up in which case, I'd keep it. If it truly isn't being used, then remove it. I bought a place that had an oil furnace that didn't work (she had portable space heaters everywhere-crazy) and the seller had to replace it with a heat pump and remove the old oil tank as a condition of the sale.
Is the tank buried or in the basement/mechanical room of the building? If buried, I would either have an EIA performed (your lender may request one given the tank has been disclosed) or, at the least, have the tank inspected. If there is any chance the tank may have leaked, then you want the Vendor to handle its removal.
Inside tanks are easier to assess, empty and remove, but even then if I were to be assuming responsibility for its decommissioning and disposal, I'd discount the costs from my offer.
They may require you to remove it as a condition of giving you the policy in the first place, or within a month or two of closing as a condition of continuing coverage.
Insurance companies are getting increasingly demanding with inspection items and unused oil tanks are one of their hot buttons. At the very least, they will almost certainly tell you to remove the fill pipe (so an oil company which gets the address wrong doesn't fill the tank by accident - it happens). And there's a chance they'll demand removal of the tank too.
The houses you've seen that had unused oil tanks in the basement may not have had insurance inspections recently, so it might be an issue more likely to come up when properties change hands and new insurance policies/inspections are done. Similar to how houses in Woonsocket with lead water pipes go for years that way, until it's time to sell and then the city demands it gets changed.
If you get past those two hurdles (the lender and insurance company), the last one is simply that someday, when you go to sell, there's a not insignificant chance it will come up as an issue for the buyer so you may have to deal with it in the end, anyway.
There's certainly the school of thought that "money today is worth more than money tomorrow", so if you can defer the expense of removing the tank years down the line, and there's a chance you never have to do it, then that's an approach worth taking. So it's something to consider.
But there's also the fact that if/when you do have to remove it, it might not be cheap to do so. So, if at all possible I think it's something you want to push back for the seller to address, if you feel you can. (And remember, someday your buyer will probably get the same advice, and depending on the phase of the market they may have the leverage to demand you do remove it.).
At the very least I think it's something you should ask your insurance agent about, just so you go into it with eyes wide open, and have a good idea of whether it's something you're going to have to deal with if you buy the property with the oil tank.
@Jeremy Trier not anything I would blow a deal over if it is a sensitive situation. Many people will pump the oil out for free and the empty tank won’t pose any issues.
@Jeremy Trier These underground tanks tend to leak and can cost thousands of dollars to clean up/remove. Also, if you ever sell the property it could present an issue. If you are going to leave the tank in place, it is worth having it inspected. If the tank is leaking, it may be worth walking away from the deal, or requesting that the owner pay for tank removal and cleanup.
@Jeremy Trier to put this in perspective, I just sold a three unit apartment building here in Berwyn, IL last week that had an underground storage tank. The seller had to pay $7,000 to remove the thing, and the contractor he selected had to coordinate with the EPA and the State Fire Marshal. I would negotiate a little harder on an underground storage tank if I were you. Don't underestimate how expensive/annoying this kind of issue can be.
The tank is in the basement but not in the underground (very common in New England) . We negotiated and it will be removed prior to closing. Thank you all for your help!.
Congratulations @Jeremy Trier , I think that was a great move and I'm happy to hear you're not taking on that issue/hassle yourself. Nice negotiating!