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When buying or selling a home with an underground oil tank, its possession can be a determining factor in home sales.

This is because underground oil tanks pose hidden risks that could result in significant costs to the owner. If you need help with difficult real estate procedures, do not hesitate to contact our NJ real estate attorney.

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Buying Or Selling A Home In New Jersey And Other States With An Underground Oil Tank In 2024

Currently, there are no regulations prohibiting the purchase or sale of a home with an underground oil tank in New Jersey. 

However, houses that have these underground tanks tend to be less likely to sell compared to those that have tanks:

  1. Of gas, or 
  2. Installed on the ground. 

Considering that time is money, the question arises of what to consider when buying or selling a home with an underground oil tank. 

Additionally, during the review of these tanks, it is common for an unknown liability associated with the underground tank to be mentioned. This creates certain additional considerations for both parties involved.

what i need to buy a house in nj

On our blog, we have extensive information on buying a house in New Jersey and also have a complete guide on how to sell a house in New Jersey. Reviewing them will help you a lot to obtain general knowledge, but our lawyer Carolina is the one who will help you in specific processes and who can give you precise information about your case.

Hidden Dangers Of Buying Or Selling A Home With An Underground Oil Tank

When searching for a new home, potential buyers often overlook the existence of an underground storage tank. This can be an obstacle, as purchasing a property with such a tank can lead to significant and potentially dangerous problems. Let’s take a look as some of these risks:

1# Health Risks

Oil tank leaks not only impact the environment, but also pose health risks to those who live in the area. Being exposed to oil and its vapors can lead to various health problems. For example: 

  • Respiratory disorders,
  • Skin irritation, and
  • More serious conditions with the passage of time. 

These health hazards can have devastating effects on the individuals who inhabit the premises. 

2# Regulatory Hassles

These deposits are under strict regulation in various regions. Therefore, government entities and local authorities require that owners comply with specific guidelines. These may include: 

  • Maintenance, 
  • Periodic reviews, and 
  • Compliance with environmental regulations. 

Failure to comply with these responsibilities could result in significant fines and legal complications.

Risks of buying or selling a home with an underground oil tank

3# Financial Burden

Maintaining and removing underground oil tanks can result in significant costs. However, even if the tank does not leak, huge expenses are incurred, such as:

  • Periodic reviews, 
  • Soil tests, and 
  • Insurance. 

The removal of the tank represents a considerable financial burden, since it involves excavation costs, soil correction and so on. These frequently reach figures of tens of thousands of dollars.

4# Environmental Concerns

Avoiding a property with an underground oil tank may be a good decision, due to the risk of environmental contamination. Over time, these tanks can corrode and develop leaks, releasing fuel onto the ground. 

This substance can leach into groundwater and nearby bodies of water, causing lasting damage to the environment. Cleaning up this contamination can be expensive and your homeowner’s insurance may not cover these costs.

5# Impact On Property Value

Many potential buyers are cautious due to the risks and costs associated with these underground fuel tanks. As a result, it could cause the property to stay on the market longer and sell for a lower price.

How To Determine If An Underground Heating Oil Tank Is Leaking?

Underground heating oil tanks tend to deteriorate over time. Generally, small perforations appear that allow fuel to leak in small amounts, but over time, these can evolve into more significant cracks.

For sellers, potential signals may include:

  1. An increase in heating bills, and
  2. The need to refill the tank more frequently. 

Serious leaks can be evidenced by the death of nearby plants or the presence of a strong odor near the tank.

It is crucial to keep in mind that:

  • A home tank typically holds between 500 and 1,500 gallons.
  • Any leak can have serious environmental consequences, contaminating both soil and groundwater, and affecting local fauna.
  • The only sure way for sellers or buyers to confirm the existence of leaks is through soil testing. 
  • A specialized company will take samples to identify the leak and evaluate the extent of the fuel.
  • Cleanup of the leak must comply with legal standards, and may result in a recommendation to decommission the tank or a risk assessment. 

If you are selling a property with an underground oil tank, it is essential to be prepared for significant negotiations with the buyer. This will be regardless of the number of leaks present.

The Importance Of A Home Inspection

Enlisting a professional to perform a home inspection in New Jersey is a standard step in the property purchasing process. 

If you are purchasing a home in an area where underground oil tanks are common, it is crucial to inform the inspector about this. This professional can examine the property for signs of the presence of an underground tank.

What Should Home Buyers Consider When Purchasing A Home With An Underground Storage Tank?

The presence of underground fuel tanks can be a critical factor. However, there is some opportunity for buyers to use the presence of these tanks as a negotiating tool in their favor. 

The importance of addressing associated environmental concerns is emphasized, highlighting the need to work with certified environmental contractors. Now, the following must be taken into account:

selling and buying houses with underground maintenance tanks

1# Knowledge Of Underground Fuel Tanks

Before starting negotiations, it is key to understand the risks associated with underground maintenance tanks. This is because mishandling can cause soil and water contamination, generating considerable cleanup costs.

How To Detect Possible Leaks In The Underground Fuel Tank?

An effective method involves performing a soil analysis around the tank to identify any potential problems. If the presence of fuel on the ground is evident, it could become a negotiation tool for:

  1. Obtain a more favorable price, or 
  2. Withdraw from the transaction.

Is It Advisable To Remove An Underground Oil Tank?

When purchasing the home, it is recommended to remove the underground tank and install an above-ground tank. This results in a more affordable home with an upgraded tank. Additionally, if a leak is confirmed in the tank, a refund can be requested from the state. 

Typically, the option is provided to switch to a natural gas system or maintain fuel use, each with its own particular advantages and disadvantages.

2# Site Preliminary Analysis

As a buyer, the first step is to conduct a preliminary site assessment, which may include:

  • Performing a tank scan, or
  • Phase 1 Environmental Site Assessment (ESA). 

This will allow identifying the condition of the underground tanks and their possible risks to the environment.

3# Hiring Environmental Specialists

It is essential to contact New Jersey certified environmental contractors for these assessments. They have the experience and equipment necessary to accurately detect and evaluate underground fuel tanks. 

Collaborating with accredited professionals ensures accurate information and compliance with New Jersey environmental regulations.

4# Negotiation Strategy

After identifying an underground oil tank on the property, it is time to develop a negotiation strategy, such as:

  • Contingencies. It is important to include contingency clauses in the purchase contract that protect interests.
  • Seller’s responsibility. It is advisable to negotiate to have the seller remove the tank and perform any cleaning before closing.
  • Leverage information. It is crucial to share the results of the evaluation with the seller to highlight the costs and risks associated with the tank. 
  • Evalutate cleanup costs. Individuals should obtain estimates from environmental contractors for tank removal.
  • Purchase price adjustment. It is possible to negotiate a lower purchase price based on estimated cleanup costs.

5# Regulatory Compliance

New Jersey has strict regulations for underground tanks. Therefore, sellers must comply with:

  • These regulations, and 
  • Obtain necessary permits for tank removal and soil remediation. 

6# finalizing the deal

Once the negotiation is successful and the seller has fulfilled his commitments, the closing of a house in New Jersey proceeds. Therefore, it will be necessary to verify that all the required documents and procedures are in order before finalizing the real estate transaction.

house in new jersey with underground oil tank

What Reasons Might The Seller Choose To Sell The Property Without Removing The Underground Fuel Tank?

Typically, not removing the abandoned tank could save the seller about $1,000, especially if it is moderate in size. However, removal carries the risk of uncovering soil contamination, which could result in:

  1. Expensive remediation processes, and 
  2. Discourage sellers from withdrawing before closing.

The decision not to remove the tank can be attractive to sellers, as it avoids stress, saves time and money during the sale. However, most sellers choose to remove the tank due to the following:

  • Limiting the number of buyers willing to purchase properties with underground fuel tanks, and 
  • In some cases, buyers often prefer to avoid possible future problems, so removing it is ideal to advance the transaction.

Additionally, it is worth noting that some lenders may be reluctant to provide loans for properties with abandoned tanks. 

What Are The Factors To Consider When Choosing A Company For Underground Oil Tank Removal?

The regulations for Underground Storage Tanks (UST) in New Jersey state that:

  • All personnel involved in the installation, closure, testing and design of corrosion protection systems for UST must possess specific certification. This will be to carry out said services. 
  • Fuel tanks contain chemicals that are harmful to human health and the environment. Therefore, underground storage tank certification requires completion of specialized training. 
  • This training must include the operation of necessary equipment, as well as a 40-hour health and safety course. 
  • Additionally, refresher courses are required every three years to renew this certification. 

Whichever company is chosen to carry out the deposit extraction, it is imperative to ensure that all its staff have this mandatory certification.

Tank Sweep

During tank sweep, the contractor typically:

  1. Uses metal detectors, and 
  2. Visually observes the place. 

This will be to identify the presence of a UST. They will search for signs such as:

  • Fuel lines, 
  • Depressions in the yard, and
  • Affected areas on the property. 

It should be noted that when purchasing a home in New Jersey on land that is fully owned, a tank inspection is required. However, this excludes:

  • Condominiums,
  • Cooperatives, and
  • Townhomes.

This obligation persists regardless of the circumstances in which the property is located. 

townhouses vs single-family homes

For more information on townhouses, read our blog on “Townhouses vs. single-family homes”.

Metal Object Detection

After detecting a metal object during tank scanning, additional testing is suggested, such as using:

  1. Advanced metal detection equipment, or 
  2. Ground penetrating radars. 

These tests include the possibility of an exploratory excavation to identify the underground object. The seller’s attorney should be informed of the findings, obtaining the seller’s permission for additional testing. 

If an item not related to a tank is found, then you can move on to other elements of the inspection. Should a tank be discovered, additional decisions must be made and negotiation with the seller before moving forward with the transaction.

Underground Oil Tank Removal

If an abandoned underground fuel tank is found, the next action is to negotiate with the seller for its removal by a licensed contractor. 

  • The attorney will inform the sellers and request that the sellers remove the tank, with their own costs and the necessary permits before closing. 
  • Assuming post-closing risk is not advisable, even if the seller offers credit. If the seller does not agree to the removal or it is not completed in time, the buyer can invoke its contractual rights.
  • In residential transactions in New Jersey, the seller is likely to agree to the removal due to the legal obligation to disclose the presence of the UST. 
  • Typically, the seller pays for the removal, hires a certified contractor, and obtains a removal permit. 

Likewise, the average cost of this is usually around $1,700 plus the permit. After removal, the tank and surrounding area are inspected. If no issues are detected, the permit is closed and a “Certificate of Approval” is provided to the buyer prior to closing.

Our residential real estate attorney in NJ can assist with all types of residential purchase and sale procedures. Please contact us before navigating these complex procedures.

Should I Remove An Underground Fuel Tank?

The final decision remains in the hands of the individuals. For example, if they choose to keep it, they must be prepared to face a long and complex home sales process.

In most cases, the most recommended option is to uninstall or remove the fuel tank. These include:

  • Urgent: When the tank leaks, and
  • Non-urgent: If the tank is relatively new and intact.

Tank Removal Or Replacement Request

In some cases, sellers avoid the responsibility of these tanks and prefer selling a house as-is in NJ. As a result, informed buyers are reluctant to purchase properties with old or potentially leaking tanks. 

For this reason, buyers are advised to ask the owner to remove and replace the tank, as they are usually past their useful life and testing does not guarantee safety. 

Frequently Asked Questions When Buying Or Selling A Home With An Underground Oil Tank In New Jersey

Is it true that it is prohibited to sell a house in New Jersey if it has an underground fuel tank?

There are no restrictions on selling homes with underground fuel tanks in New Jersey, but they tend to sell more slowly than properties with above-ground fuel tanks.

What is the cost to repair a leaking fuel tank?

Repairing a leaking tank typically costs approximately $6,500, without affecting groundwater. However, if the groundwater is affected, the cost can be more than $20,000.

Is it possible to scan the property for underground tanks?

It is possible to carry out a survey of the house, ideally starting in the basement, if conditions permit. A scan of the exterior may then be performed, followed by the submission of a written report with the findings.

What percentage of underground fuel tanks are removed due to leaks in New Jersey?

Typically, about 20% of fuel tanks are recalled in New Jersey for leak problems.

How Can Curbelo Law Help You When Buying Or Selling A Home With An Underground Oil Tank? 

If you are looking for your dream home or want to sell it, it is key to have expert help. Therefore, don’t hesitate to contact our professionals at Curbelo Law.

At our New Jersey real estate law firm, a team, led by attorney Carolina T. Curbelo, understands the nuances of the local market. This includes the management of properties with underground storage tanks. Contact us to see how we can expedite the purchase or sale of your home.

FULL LEGAL REPRESENTATION AND COUNSELING

FLAT FEE RATE