Risks with Underground Oil and Septic Tanks — Home Buying and Selling

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How to protect yourself when buying or selling a home with underground oil or septic tanks. Testing procedure for oil tanks is discussed as well as the proper way to decommission a septic storage tank.

Many homes throughout the United States have heating oil tanks installed in their basements or buried underground. Homes that are not connected to a public sewer will have some sort of on-site septic system, employing either storage tanks or a leach field. Overtime, many home owners switch from oil to natural gas when it becomes available or when it is economically feasible. Septic systems may also be abandoned in place when public sewers are installed in a community. As a home owner you should be aware of what underground tanks are installed on your property so that you can properly disclose them when selling your home. Home buyers should also be aware of the risks when buying a home with underground storage tanks that are either in use or abandoned.


Oil Tanks

Many states have strict rules regarding the installation and maintenance of underground storage tanks, especially when it applies to fuel oil. For obvious reasons, a leaking oil tank can pose a serious risk to the environment and can cause concerns for health if the oil finds its way into an aquifer and drinking water. You can see what the requirements are for your state by checking with either your local or state health department, building permits and inspections, or the Department of Environmental Protection in your state. Each county has a DEP office and a quick internet search will allow you to find all of the contact information you will need.

Most states require fuel oil delivery companies to keep their licenses up to date and if they determine that your oil tank is leaking or has some other problem that poses a serious risk, they can not deliver oil and are required to inform you of the issue and then take the necessary steps to correct the problem.

Septic Tanks

Homes that have septic storage tanks installed on their property are usually regulated by the state and local department of health. Once septic tanks are installed, there are usually no further inspections, but they are usually pumped out every 1 to 3 years and the septic maintenance contractor will be able to perform a visual inspection at that time.

The problem with a septic storage tank is that they are usually deep underground and the manhole can be several feet underground. If the lid is not raised so that it is level with the existing grade, then it will need to be exposed each time the tank is pumped out. If the system has been abandoned, it will be very difficult to locate the lid without a site plan or the information from the septic contractor.

Underground septic storage tank

Selling or Buying a Home with Underground Tanks

Sellers must disclose information that they know about the home, but if they purchased a home with an abandoned oil tank or septic tank, they may not be aware that they are there. A home inspection may be able to find evidence of a pre-existing oil tank during the inspection of the heating system and basement or when walking around the outside. Typically there are two pipes above grade, a fill pipe and a vent pipe. If there were not removed, then you or the home inspector will be able to find them. At that time you should insist that the tank be tested to determine if oil is inside the tank or if the tank has been drained and filled with sand. Currently, most states require that abandoned oil tanks be removed and the soil tested under the tank to determine if there is oil present.

If the home owner switched from oil to natural gas or propane during their ownership, they should have obtained a building permit to have the gas lines installed and inspected. There should also be a record of when this occurred with the local gas utility or propane supplier.

Some other oil tank negotiating tips:

As a seller, you should test your tank before entering into a purchase agreement with a buyer.

This will enhance marketability of your property and avoid confusion during the real estate transaction. In the event that the tank inspection finds problems with the tank system, the seller will have time to repair any problems without being pressured by an anxious buyer.

If the buyer's inspection determines the tank system failed, the buyer is in the driver's seat instead of the seller, especially in current real estate markets. There are many instances where buyers force sellers to completely decommission tanks even when the tank requires only a minor repair such as fixing a broken pipe or repairing a tank fitting.

If the buyer orders the inspection and the tank fails the inspection, the buyer has the right to cancel the contract or demand the seller correct the problem. If the buyer cancels, realtors have an ethical obligation to inform all potential buyers about the tank failure, even if the seller remedies the tank system problem.

Choose a tank inspection company to test your tank or soil- not a tank contractor that is also in the business of removing or repairing tanks.

Companies that perform tank inspection and tank removal services have a vested interest in finding problems with the tank system, which is an inherent conflict of interest.

If the buyer hires the tank testing company you should obtain a written copy of the testing company's insurance policy which should contain coverage for both liability and errors and omissions insurance.

You should refuse to allow companies that are in the business of removing and repairing tanks to evaluate your tank.

You should request copies of the company's state licenses and certification to test tanks in advance of the test date. In many jurisdictions the company and the technician must both be licensed.

The testing company should have the capability to test the tank and evaluate the soil.

Even if the tank is in active use you should have it tested as a buyer. Many realtors and attorneys advise homebuyers that testing underground oil tanks is not necessary if the seller has tank insurance. However, homebuyers do not realize that they will expose themselves to increased risk of environmental liability by not testing oil tanks before their purchase.

Tank insurance 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.

Helium testing:

Helium is the lightest inert gas and will escape from any leaks in the piping or tank quickly. Helium gas is also ideal because it will not react with other elements so it safe to mix with hydrocarbon vapors.

After injecting the system with helium gas, a helium detector will pinpoint any cracks or holes in the piping or tank by identifying helium gas in the problem area. This is an extremely accurate and sensitive method of locating leaks. Helium testing drastically reduces the time needed to pinpoint leaks and it is also very inexpensive when compared to traditional methods of pinpointing leaks such as excavation and visual leak inspection.

Oil Tank Removal

Septic Tank Concerns

As stated before, septic tanks are more difficult to locate or even determine if they have been decommissioned. You may need to locate the original building permit for the home at the local building code office to see if the home had a private sewer system when it was constructed.

Typically the health department will require that the tank top be uncovered, the top removed and the sides of the tank cracked so that it can not hold water. The tank is then filled with gravel or clean fill which should also be compacted. The grade is then brought back to the level of the surrounding area. Unfortunately there have been many tragic incidents when the tops of the tanks have either collapsed or lids have rusted away and children have fallen into the tank and drowned.

Watch out for evidence of subsidence or sinking soil, rusted-through steel septic tank covers, home-made wooden or flimsy tank covers, or home made cesspools and drywells which risk collapse. Look for areas in the yard where there is a patch of grass or weeds that doesn’t match the surrounding lawn. It could be a large rectangular area from the top of the tank or a circular area for the manhole access lid. If it is near the surface, the grass may not grow as well as the surrounding area where there is ample soil and available water beneath the surface.

Being better informed about the risks from underground oil or septic storage tanks will help in determining whether or not to purchase a new home or make your current home safer.


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