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My Oil Tank is Underground
"My oil tank is underground and it has insurance; why do I need to remove it?" , "I am negotiating a contract on a home with an underground tank, what do I need to know about it?", "There is a decomissioned tank in the back yard, all the permits are on file at the township office.", "Can we ask the seller to pay for the soil test?", "We haven't had any problems with our tank, we are not going to take it out of the ground."
When I first started in real estate, the only thing I needed to know when selling a home with an oil tank was the number of a reputable inspection company. We held our breath during the tank inspection and exhaled when the soil reports came back clean. Then, during a transaction on West Oak Street in Basking Ridge, we were days away from closing and my client (a first time home buyer) called me in tears: "I just got a call from my homewoners insurance company, they have a new policy against insuring homes with underground storage tanks". That was the beginning of the end!!
While there is no law against the transfer of property with an underground oil tank, it is increasingly difficult to do so. Especially in a buyers' market! Even properly decommissioned tanks run the risk of having leaked at some point in time. The clean up of contaminated soil is the responsibility of the homeowner - regardless of when the leak occured. In other words, if you buy a house with an underground tank and a year later you pull the tank to convert to natural gas and there is a leak, then YOU are responsible for the clean up. There will be no going back to the prior owner for help with the clean up and there will be nobody to blame! So, as a buyer, it is in your best interest to include a clause in the contract stipulating that the tank be removed. It also makes sense, if the seller claims that there never was a tank, for a buyer to sweep the property to ensure that there aren't any tanks hiding under ground! As a seller, the impetus for pulling the tank prior to listing the property or at the very least prior to contract/closing is the fact that buyers know that it is in their best interest to include a clause in the contract stipulating that the tank be removed. Removing it before listing the house eliminates the issue completely. In today's market that is the best thing to do! Eliminate any issues or potential issues before opening the door to any buyer who has the upper had to begin with.
If you are a homeowner with an underground tank, it may not be necessary to remove it - contact your insurance company for more information. I just did my homeowner's policy renewal. I do not have a tank, but if I did, as of January, 1, 2009 I would have had to purchase an endorsement to cover us in the event of a leak. AND this renewal year is the only time that my company is offering this endorsement; once it is applied it can be renewed, but once withdrawn, it cannot be reapplied.
Bottom line: if you have a tank, take it out or make sure you are properly insured!
The cleanup process can be long, costly and complicated, even with a small fuel leak. Your insurance policy and municipal, state and federal regulations will dictate how the cleanup must proceed and the combination of these rules can uniquely affect individual properties.
There is funding available from the state for removal costs as well as for costs associated with clean up. For more information on NJDEP funding, go to www.nj.gov/dep/srp/finance/ustfund/, or call 609-777-0101. Another resourceful website is www.NJEDA.com (under the "Applications" tab, click on "Underground Storage Tank Funding Programs".
If you have any questions about the information in this post, or if you are considering a move into or out of Basking Ridge, contact me here or call 908-432-0318 as I'm sure I can help!
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