Many homes in the past were fueled by an underground storage tank. Some still are, but a significant number of homes are now either fueled by natural gas or an above ground fuel tank. Of these homes, many were converted to either gas or an above ground tank, so an issue arises as to what happened to the underground tank. One of the things we always recommend to our buyer clients when doing their home inspections is that they have the subject property (“Property”) tested for an inactive underground storage (fuel) tank. The reason being is the consequences of not doing so can be catastrophic.
When a home is converted to natural gas or an above ground fuel tank, the underground fuel tank that was heating the home is most likely removed. However, there are situations where the underground tank was left in place. Many times in those situations the underground tank is decommissioned or abandoned – which essentially means filled with sand or another substance. The State of New Jersey has recognized that this is acceptable when converting a property to natural gas or an above ground tank. However, many times a lender will want to make sure the Property is free of all underground tanks, regardless of whether it is abandoned.
The buyer will then have what is commonly known as tank scan performed by an inspector (preferably a geophysical inspector) to see if there are any underground tanks on the Property. If a tank is discovered, the seller/owner will either have to remove the tank in accordance with all governmental laws, or the lender will not approve the loan. Should the seller/owner have the tank removed he/she will most likely need to apply for permits from the municipality. The seller/owner will also need to hire a company that specializes in removing and testing such tanks. An inspector from the municipality (e.g., building inspector) will have to be on site when the tank is removed.
When the said company is ready to remove the tank, it will dig a hole, and the municipal inspector will assess whether or not he/she believes the area surrounding the tank needs to be tested. If the municipal inspector does not believe the said area needs to be inspected the tank will be removed, and for the most part the issue(s) regarding it will be resolved. However, if the area around the said tank needs to be tested and contamination is discovered, things can get very expensive.
The reason being is the soil surrounding the said tank will need to be removed and replaced. It will also need to be transported to a special facility. This can take time as such soil may not be very readily available, and an appointment has to be made to take the contaminated soil to the special facility. Additionally, the cost of the new soil, and removal and disposal of the old soil can be expensive (e.g., thousands and thousands of dollars).
An even worse scenario is if it is determined when the area is initially tested that the contamination (fuel) hit ground water. If the water is contaminated the remediation will be even more expensive, and can open the seller/owner up to law suits from neighboring properties, as (i) the contamination may have spread[1] and (ii) the neighbors will have to be notified. This will require a significantly more extensive remediation process and will take time.
If the initial testing is done by a licensed remediation professional, the contamination will also be reported to the state, once it has been detected. This means that the seller/owner will most likely have to address the issue as soon as possible, as opposed to just deciding not to sell, and remediating the issue at a later date.
We recommend to buyers, even if their lender is not requesting a tank scan take place, that they do so anyway. The reason is, when they go to sell the property, the future buyer may want or need a tank scan to get its loan. If a tank scan was not performed when the current buyers bought the Property, they will be stuck with the issue even though they never had anything to do with the tank. This (again) can be very expensive.
For more information regarding why you should have a property tested for an underground fuel tank, you should consult a company that specializes in their removal.The information in this blog posting is for general information purposes only. Nothing in this blog or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information in this blog is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.
[1] It is generally easier for chemicals to spread more quickly via ground water than it is through the soil.