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Wileynj's correct, if the tank isn't leaking there's no DEP issue, at all.
Also, if the township has no lien against the home's title, or injunction from the court, there actually is no liability. You didn't do anything with the tank, you don't somehow "inherit" liability in civil court because you bought the house.
That's why home inspectors are required, and licensed. The entire process legally requires that liability does NOT fall upon you.
Also, if the township has no lien against the home's title, or injunction from the court, there actually is no liability. You didn't do anything with the tank, you don't somehow "inherit" liability in civil court because you bought the house.
That's why home inspectors are required, and licensed. The entire process legally requires that liability does NOT fall upon you.
What are you trying to say here? You can indeed "inherit" liability (actually, you purchase liability) when you buy the house.
You, as the current owner, will be liable for any leakage that either occurs or prior leakage that is discovered while you are owner of the house.
So just because there is no existing lien, injunction, or other pre-existing legal issue does not mean that a new owner is in the clear. The only way that a prospective new owner can be assured that he's in the clear is to have the existing owners (the sellers) remove the oil tank and confirm (via soil testing during removal) that no soil contamination took place.
Lusitan is 100% correct Bill. Typically, people who choose to abandon vs. remove a tank suspect that they may have an issue with the tank and feel that leaving it in place is the best way to "hide" the issue. It's usually very difficult to tell if a tank is leaking when you do an abandonment. Now, an abandonment accompanied by soil tests that results no issues, is a safer bet. Still not 100% accurate but better than nothing. Another issue is if a potential insurer of the home finds out that the property has a decommissioned tank still on-site, most will not right a policy unless it's removed and confirmed that there are no environmental issues. Realtors really need to educate themselves a little better on the issue.
Thanks Wiley. And Lusitan. I did exactly that. (Educate myself, that is.)
It turns out that, according to the two insurance brokers with whom I spoke, that NJ insurers no longer care much about any underground oil storage tanks that have been decommissioned. They used to exclude liability arising from damage to property other than the on which the tank is located, and cover the actual property. That was apparantly changed, so that the default is to simply exclude any liability that may arise from them, whenever it happens & whatever the nature & cause. I'm told that there are two exceptions, and these are the same two high end insurers who never excluded the neighbors. So insurers don't usually ask about tanks because they simply aren't covering them. That isn't an issue for active tanks, because we all knew that the homeowners insurers weren't covering them, and made sure that homeowners were made aware of the insurance they could (and should) get from their oil providers.
Last edited by Bill Keegan; 02-03-2009 at 02:20 PM..
Reason: typos
Thanks Wiley. And Lusitan. I did exactly that. (Educate myself, that is.)
Cheers, Bill
Glad to see that the information you found matches what I posted earlier: you can get an insurance policy on a house with an underground insurance tank, but it won't cover anything having to do with the tank.
There's a reason why insurers don't want to go near underground oil tanks, in any condition or in any state of decommission, with a 10 foot pole. Potential home buyers should be just as wise with their money and never buy a home with an underground oil tank in place. Period.
To all the real estate agents out there: if you're listing a house, this is something you should ask your sellers about, and if there is an underground oil tank you should recommend that they get it removed and the soil tested ASAP, so this isn't an issue down the road when they're close to a sale.
There a non-zero chance that the decommissioning was not done properly and that you have a tank with oil still in it waiting to leak; or a tank that had already leaked with soil that's already contaminated. So long as that risk exists, a risk that you cannot cover with insurance, it would be foolish to purchase the house. It's a potential 250K+ liability that could bring financial ruin upon you and your loved ones.
Why take that chance? Because some real estate agent says not to worry about it? Because the owners don't feel like shelling out the money to fix it?
Hi Lusitan,
Are you saying that the liability to clean soil contamination is around 250K? Any link for that?
Are you saying that the liability to clean soil contamination is around 250K? Any link for that?
Thanks!
It could be that and more. Mine was $235,000. Then it was covered by insurance. There are cases of much more.
In 04/05 when mine was remediated, State farm had a case. The people that they were insuring had a leaky tank. They were told by the previous homeowner that the property always had Gas heat, which was untrue. They left the tank in, and converted to gas. After they sold the house they ran off to India. The new homeowners were stuck with a house with a big Liability. It was not covered.
You not only have to have soil cleaned, but a series of tests need to be done.
Also the DEP has to come certify that the work was done properly. You also need them to give you a no further action letter.
Don't buy a house with the Tank underground, and be sure that there was never one there, unless it waas disclosed and they have a no furthur action letter.
Diane G
Thank you Diane. I just bought a house with a underground tank. I was planning to convert to gas, so I haven't bought tank insurance (since oil company's tank insurance doesn't cover tank removal cost if I convert to gas). Now I think I'd better first move the tank from underground to on ground with oil company's insurance coverage.
Thank you Diane. I just bought a house with a underground tank. I was planning to convert to gas, so I haven't bought tank insurance (since oil company's tank insurance doesn't cover tank removal cost if I convert to gas). Now I think I'd better first move the tank from underground to on ground with oil company's insurance coverage.
Anyone can suggest a better idea?
That's you best choice. You only need to stay with oil for 1 yr. after you remove the old one and install a new one. Tank programs are not a guarantee... you must have the tank tested before they will write you a coverage policy. The other option is, the State Grant program. You may qualify for up to $1200.oo toward the removal of the tank and another $1800 toward the installation of a new one if you opt to stay with oil. If the tank is leaking, there's grant monies available for the cleanup as well. You can't make more than 250K yr. or have more than $500K in net worth, not including retirement plans or your home! It's a great program - all but one of my customers has received the grant monies. You can check out the information by going to the www.njeda.com website for non-leaking tanks and then over to the NJDEP SRP website for leaking tanks.
Thank you, Wiley. It seems the state grant program is an even better option. I want to get rid of the tank ASAP. The website doesn't say how much the state can provide for cleanup, nor does it state clearly whether the help is in grant or loan. Could you tell me more about it? I also sent you a direct message.
Thank you, Wiley. It seems the state grant program is an even better option. I want to get rid of the tank ASAP. The website doesn't say how much the state can provide for cleanup, nor does it state clearly whether the help is in grant or loan. Could you tell me more about it? I also sent you a direct message.
Hey GS - I responded to your DM but I will also respond in here just in case others have the same question(s). They do not indicate a maximum amount for the cleanup activities because it's determined on a case by case basis. The amount is determined by estimates provided by contractors. It's site specific in other words. Regarding loan vs. grant...that depends on your personal financial situation... income, net worth, financial hardships, etc. If the State feels that you make too much or that you don't meet their requirements, they may offer you a loan instead of a grant. I've only had one homeowner get approved for the loan instead of the grant...apparently he made too much money.
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