No Record of Underground Oil Storage Tank: Should I Worry About It?

Last week I ran into a situation which was interesting. The buyer purchased a property with the intention of demolishing the house on it and rebuilding. No inspection was requested by the buyer. The seller issued a disclosure statement stating that there was no buried oil tank and that a clearance certificate from the district would be provided.

I was hired to be the owner's representative for the demolition. As this was a 70 year old house, I called the district and asked if there was anything registered regarding an underground storage tank at this location. After all, in our area all the original properties were heated with fuel oil. Nothing was on file and this raised a red flag for me. I called an inspection service to come out and scan with their metal detector.

The next morning Scott arrived and we walked the building perimeter once. Nothing conclusive. As there is a concrete patio and walkway around the house, Scott de-tuned the detector to cancel out the false readings from the embedded rebar steel. We also looked at what corner it would be logical to have an oil truck stop to top up a tank if there were to be one. On the second pass we hit a hot spot. The reading was off the scale. Further investigation along the foundation perimeter uncovered a copper pipe coming out of the house foundation and goose-necking into the ground.

In BC the seller is liable for all the removal and cleanup costs. Those can range from under $10k to well over $100k. It all depends if the tank leaked and contaminated the soils and water table.

I informed the buyers of the findings. The buyers contacted their realtor with the fact that the disclosure statement was never issued by the sellers as promised in the sales agreement. The buyers agent and sellers agent worked the issue and gave me a free hand to manage the project to my requirements as our demolition and construction schedule is paramount. I've contracted a company to excavate and their enviro tech will take soil samples to see if there is a contaminated site issue. Excavation begins tomorrow. The agreement is that my clients will pay for the work and the sellers have agreed to reimburse all expenses, including my time.

So here's an example of real estate professionals working cooperatively together to resolve a potentially huge issue, quickly and to the satisfaction of the buyers.

I will let you know how it works out.

Lesson learned is to make sure the all the agreed upon documentation is issued at closing. Had it not been for an inquiry from a third party (me), imagine the disruption to the construction schedule if the tank was uncovered during the footing excavation stage and then the ugly delay claims against the sellers.