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Property Buyers

Buyers Beware!

Underground oil tanks and the contamination caused by them can become an unexpected personal and financial nightmare for you unless you make wise decisions during the purchase of your new home.  There are simple steps that you can take to protect yourself from the liabilities that come with underground oil tanks. 

Holes in the bottom of an underground tank.

There is no State or Federal requirement to remove an underground oil tank unless it is known to be leaking.  Therefore, underground oil tank situations are an issue that has to be negotiated between the buyer and the seller. 

Be proactive!  Unless you take appropriate steps before you buy the property, you may assume full responsibility for the tank and contamination cleanup even if you never use the tank.  If you don't become legally responsible for the tank and contamination, it still may cause you problems and cost you a lot of money when it is your turn to sell the property.  88% of all heating oil tanks have leaked requiring cleanup.  Cleanup can cost $15,000 to $20,000.

You should require that the oil tank and contamination be property resolved before you buy a property to ensure that you do not assume full liability for the tank and contamination.

Obvious holes are usually discovered after removing a tank.

Do not settle for vague verbal descriptions about tank removal or filling with sand.  The seller should be able to document specific actions taken by the environmental professional who "closed" the tank.  This documentation should include soil sample results as well as a description of how the licensed professional investigated to ensure that no leak had occurred from the tank.  If this can not be produced, more work should be required. 

Please take some time to educate yourself about the issues surrounding oil tanks and contamination cleanup requirements so that you can limit your liability before you purchase the property. 

PES is here to inform and support you.   We are experienced, licensed, fully insured, and offer free, no obligation estimates.  Please see our About PES Page. 

 

Why is an underground tank a concern? 

Most homes built before 1975 used an underground tank to store heating oil. 
We estimate that there are more than 15,000 properties in New Hanover County that have or had an underground old tank. 

88% of all heating oil tanks have leaked requiring cleanup in compliance with State and Federal laws.  Although cleanup can be costly, currently a Trust Fund is available to help pay for the assessment and cleanup costs.  There are however some non-reimbursable costs. Please see our Costs: removal / cleanup Page.

Buyer Beware! If you don't negotiate these additional costs during the property purchase, you may have to bear the full cost later when it is your turn to sell the house.

12% of all heating oil tanks have leaked significantly that fuel oil is measured floating on top of the water table.  Up to 4 feet of fuel has been measured floating on the water table at a residential property in the Wilmington area. 

A groundwater oil sheen seeping into an excavation pit.
Buyer Beware! You should require the seller to have PES remove the tank and conduct a Fast Track Assessment (described below) on both soil and groundwater before you close on a property.  This will provide you the most protection because it will allow you to understand the condition of the soil and the underlying groundwater before you purchase the property.  Additionally, if contamination is found, the property seller is required to report it to the State and will remain responsible for the cleanup project even after the property transaction.  Also see our Common Questions Page, question #1.

The "closure status" of the tank and associated contamination should affect the market value of the house and how easily the property will sell when it is your turn to sell the property.  Please see our Property Values, Tanks and Contamination Page. 

Property buyers may assume liability (responsibility) for the tank and contamination (even if they never used the tank and even if they did not know a tank was present on the property).  Please see our Responsibility and Liability Page. 

Because tank ownership and cleanup responsibility is defined by the North Carolina Statues and by Federal law, tank ownership and responsibility is not necessarily "common sense."  

Fuel oil over spill from vent pipe.

For example:  If I sold you a house with termite damage, once you bought the house … it is now your problem and I'm "off the hook."  It is the buyer's responsibility to protect themselves by having the home inspected to know exactly what is the condition of the house that they are buying.  With inspection information, buyers can negotiate repairs or offer a discounted price for the property.   (Tank status and contamination levels are no less important than termite damage.  Contamination clean up will probably cost more than termite damage (~$15,000 to $20,000).)

However, oil tanks are more similar to hazardous waste.  Every person that touches a hazardous waste (the generator, the transporter, and the waste disposal facility) is responsible for the waste until proper disposal is documented. 

Depending of the tank use history, a property buyer will become legally responsible for the tank.  By policy, the State is going to enforce the current property (the buyer after purchase) to proceed with required cleanup.  You may have to involve the previous owner (seller) by legal action which may be expensive. 

This can be avoided by having the seller remove that tank and conduct a conclusive assessment before the property transaction is finalized (closing).  If contamination is discovered, the seller must report the contamination to the State which establishes them (the seller) as the responsible party for the tank and contamination.  Cleanup responsibility will not pass on the next property owner (you, the buyer). 

Eventually some one is going to have to comply with State and Federal regulations and address the tank and any contamination that may be present.

Contamination clean up for leaking tanks is required by State and Federal laws. Because 88% of all underground heating oil tanks have leaked, most properties with a house built before 1975 will require an appropriate cleanup.  While tank removal may cost approximately $1900, the contamination clean up is much more expensive (~ $15,000 to $20,000).  Currently, North Carolina has a Trust Fund that can help pay for the contamination cleanup portion of this cost.

Please note that closing a tank in place (i.e. filling with sand) does not gain any benefit for the buyer or for the seller.  Please see our Tank Closure: filling with sand Page.  

 

Solution:

You need to require the seller to properly remove the oil tank, conduct a conclusive contamination assessment, and report any contamination to the State as required.  These actions will help to limit the liability for the buyer.    Please see our Responsibility and Liability Page. 

Conducting a Fast Track assessment will allow full knowledge before purchasing a property.  (see below)

Remember, you and your real estate agent are in the driver's seat.  Let our web site educate you and you realtor so that you can take the best actions regarding this issue.  Call us if you have additional needs or questions.  Please see our Contact PES Page. 

In the past, many sellers were reluctant to properly remove a tank because of the expense. 

Buyer Beware! This is a very serious financial issue for you.  It is very important that you understand the Trust Fund enough to know what Trust Fund deductible may apply to the property you are interested in.  Between Trust Fund deductible (worst case) and non-reimbursable cost, conducting a proper tank removal and contamination cleanup can cost approximately $11,000 (out-of-pocket, non-reimbursable).  If the property does not qualify for Trust Fund assistance for some reason, it could cost approximately $20,000.  Please see our Trust Fund Page.

At a minimum, a buyer should acquire the necessary documents to allow you to access the Trust Fund with a $0 deductible.  This will allow you to know you out-of-pocket, non-reimbursable costs before you purchase.  Then you can conduct the necessary tank removal and cleanup after purchasing the house.  Please see our Property Values page.

There are many other variations that are possible to limit your liability and reduce your costs regarding the purchase of underground oil tank properties.  Please see our Contact PES Page. 

Excavation of contaminated soil.


Fast Track Assessment:

PES assumes that buyers will require sellers to properly remove the oil tank. 

In addition to requiring the seller to properly remove the tank many buyers may want to know the full condition of soil and groundwater (contamination levels) after contaminated soil excavation and before they buy the house.  A buyer doesn't want the home inspection results after they buy the house.  That information is important in making the final decision to purchase the property.  Similarly, until a soil and groundwater assessment results are known, a buyer does not have a full picture of the property condition.   

Soil contamination levels remaining at the site after excavation can generally be know in 2 to 3 weeks after soil excavation.  However, when following the State's schedule and protocol, groundwater information is not typically available for 2 to 3 months after the tank is removed.  This is typically too long for most buyers and sellers to wait.    

If a groundwater sample results are desired by the buyer, PES can install a monitoring well, collect a groundwater sample, and have sample results 4 to 6 weeks after the tank removal. 

This scope will have to be paid directly to PES because there is some risk that well and sample costs may not be reimbursed by the Trust Fund.  Costs could be approximately $2500.  For most sites, the well and sample will be required and will be reimbursed by the Trust Fund.  Please call us to discuss the estimated cost to conduct a Fast Track Assessment.  It is buyers best protection before you purchase a property.    

Please see our "Buyer Beware!" tips throughout our web site or call us for specific advice about the property that you are interested in.  PES is experienced, licensed, fully insured, and offers free no obligation estimates. 

Please also see our Property Sales and Tanks Page. 

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