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Foreclosure Tips

Buying a foreclosed home with buried or above ground oil tanks?

Things may not always be as they seem, especially when you are purchasing a property that may have hidden environmental liability.

Follow these 5 tips to ensure you’re not saddled with costly repairs and liability with your next home purchase:

1. Find out if the house has an underground heating oil tank.

Buyers should make sure to have soil sampling done if there is an underground heating oil tank. If the soil is contaminated, the current deed-holder is responsible for clean-up costs, which typically cost $18,000 and in some cases could exceed $100,000.

If you aren’t sure if the property contains underground oil tanks, it is time to have the grounds searched, especially if you find an above ground tank.

An above ground tank in the basement or outside the home is a sign that there may have been a past problem with an underground tank. Homeowners, suspecting a problem with an underground tank, would install an above ground tank and stop using the buried tank.

This only covers the problem and doesn’t solve the leak!

Today, many of these properties may still have buried tanks and frequently these tanks have leaked oil into the ground. Therefore, it is critical to identify this problem during the inspection period.

How do you search the property for abandoned underground tanks?

ATS offers expert tank location services which will identify buried oil tanks anywhere on the property.

2. Check the septic tank.

Buyers should make sure that the septic system is in working order. Replacing a septic tank can cost anywhere from $25,000 to $30,000.

If problems are discovered before the sale, the seller can help with the cost or the buyer has the opportunity to walk away from the deal altogether.

3. Scope out your potential investment if the property uses oil heat.

Oil heat is safe, efficient and economical. However, the average lifespan of a buried steel tank can vary widely depending on the soil conditions and surrounding environment.

Therefore, homebuyers intending to continue using oil heat should protect their investment by evaluating the tank and soil prior to the real estate closing.

ATS offers several options for residential tank inspections.

4. Seek assistance if you come across something you don’t know.

If there is a tank on the property that you do not understand, learn about it!

Tanks are complicated pieces of equipment and any type of problem can end up costing you lots of time and money. Find out what kind of tanks are on the property, what they do, and what you need to do to make sure they work properly.

Knowledge is power!

5. Ask your realtor about existing tank protection policies.

Even if the home you are planning to buy has an active in-use underground tank and the seller has a valid tank protection policy, that doesn’t mean that you will have to forego testing services should you assume the property.

Many realtors and attorneys advise homebuyers that testing underground oil tanks is not necessary if the seller has a valid tank protection policy.

However, homebuyers will expose themselves to increased risk of environmental liability by not testing oil tanks before their purchase.

This is why it is important to read the exclusions on the policy. Tank protection policies will only honor claims if there is a release of fuel from the tank, which is almost never the case with piping or top tank leaks.

Also, the insurance adjuster can deny claims by simply claiming the leak pre-existed the date of the insurance policy.