Underground Oil Tanks

When I lived in New Jersey, we bought a house with an underground oil tank.  Our real estate agent told us that the previous owners had the tank insured and the process was that we bought the insurance so if anything went wrong, we were covered.  Sounded good to us.  We lived there for 2 years without problem.  Then I got transferred and it was time to sell.  We had all the proof of our tank insurance ready for our buyers.  Then they said they wanted to test the tank.  Test the tank?  We didn't know it was possible.  The buyers tested the tank and found it was leaking.  We explained it was no big deal, we had insurance.  They couldn't run away fast enough.  Many months later, the insurance came through and everything was taken care of.  But we came out of the situation much wiser. 

Over 400,000 leaking underground oil tanks have been reported to the government.  The life of an underground oil tank is short, usually around 20 years I believe.  But most of them are used in homes that are as much as 100 years old.  The tanks get pin prick sized holes in them and begin to leak.  If you don't have tank insurance, there are government funds that help with remediation costs, but it can cost thousands of dollars to remove the tank, clean the soil, and refill. 

What does this mean for buyers and sellers?  If you are buying a house that might have an underground oil tank, you can do a search for underground tanks.  This is similar to a guy walking around with a metal detector.  If you find or know about a tank, there is a fairly simple pressure test that can test if the tank is leaking.  The seller should have tank insurance, and if they don't, insist on it.  Make insurance coverage of the tank a contingency in the contract.  If you are a seller and you know you have a tank, get it tested.  It is always better to get any problem taken care of before you put your house on the market, rather than have your house sit on the market while you take care of it and scare potential buyers away.

No matter what, get the tank tested and insured.  If you let it slide, any potential future buyers may not and then you will be stuck.

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