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Buying a Home With an Abandoned Underground Oil Tank

  • Transcript

    LESLIE: Amy in California finds The Money Pit on the Quake – KQKE. And you found an old oil tank on your property. Tell us about it.

    AMY: Well, actually, at the place that we’re buying. And the oil tank has been … no one seems to know … the people we’re buying the tank from don’t seem to know how long ago it was taken offline. And we’re just concerned. I’ve been researching different possibilities and found out, today, that it could be quite expensive to dig out. And I guess my question is about the legality of it and about the liability. That if we were to have this decommissioned or dug out, now, and soil damage was to turn up later once we become the owners, I know it’s somewhat more of a legal question really.

    TOM: Well, you could have huge liability. I used to deal with this all the time in the years I was in the home inspection industry. So, first of all, just let me confirm, Amy. This is an … this is an abandoned underground oil tank. Correct?

    AMY: Correct.

    TOM: And you have not bought the house yet?

    AMY: No.

    TOM: Good. Don’t. Until this is dealt with. This should not be your problem; this should be the problem of the people that are selling the house. The property’s defective by the fact that it has an abandoned underground oil tank on it, in my personal opinion. I would never, ever buy a house with an abandoned oil tank; because, as you say, you don’t know why the tank was abandoned. Now, how are they heating the house, now? Is it by oil or gas?

    AMY: Well, we know … we know why. It was converted to natural gas.

    TOM: Okay. Well, that’s actually good news. That might mean that the old oil tank wasn’t defective. But I would recommend that the tank be properly abandoned. Let me ask you another question. Is this tank accessible? In other words, could it easily be dug out?

    AMY: Well, that’s another … that’s an issue that came up just today. I had someone go and look and try to get an idea of where the tank was. Allegedly, it was under a detached garage. But the man who took it and … who looked at it today, said that he thinks that the input is in the garage but that it’s positioned between the detached garage and the house.

    TOM: Okay.

    AMY: And he said he can’t tell me how far down it is.

    TOM: Okay. I would recommend you remove this tank.

    AMY: Okay.

    TOM: Either completely remove it – that would be the best situation. If you can’t remove it, then what would have to happen to decommission it …

    AMY: Uh-huh.

    TOM: … so you would have to dig down to the surface of the tank, cut it open, clean it out and then …

    LESLIE: And then fill it.

    TOM: … fill it with probably stone or cement so it doesn’t ever collapse on itself. Now you want to make sure that they get a permit before they do this …

    AMY: Uh-huh.

    TOM: … and they want to make sure that that whole process is done under the careful, watchful eyes of the code officials. Because when it’s all done, you need the work … you need the paperwork on this.

    AMY: Uh-huh.

    TOM: Because if you ever want to sell this house, this could become a major liability for you in the future.

    AMY: Right.

    TOM: I would never buy a house with an abandoned oil tank on its property without doing something like this.

    LESLIE: Yeah. And Amy, because you’ve yet to purchase the house, when you have the house inspected and this has come up as an issue, you can use this when you’re trying to find a price with the current owner. You can make it so that they either take that cost out and then you do the work or they’ll do the work and make sure that it meets the approval of your inspector and code. So you can use this as a negotiating tool to get that price down.

    TOM: You know what, Leslie? In almost every situation, I would agree with that; but not here.

    LESLIE: Really?

    TOM: This is plain as dirt. Pardon the pun. If that tank is in there, it’s got to go. Because you have no idea how bad this could get.

    LESLIE: But it’s the … it’s the current homeowners’ responsibility …

    TOM: Right. But I …

    LESLIE: … and they need to do that.

    TOM: … I wouldn’t say, “Well, it’s probably cost $2,000 to remove it so take two grand off the house and I’ll buy it and deal with it”; because you don’t know it’s going to be $2,000. What if you get it open and it turns out that it’s all rotted out? And then there’s leaking oil that’s been going into the soil for years? And then you can’t remove that dirt without damaging the foundation of your house or of that detached garage. And on and on and on and on. I’ve seen leak cleanup jobs that have cost over a half million dollars on a regular basis …

    LESLIE: Aw, that’s a mess.

    TOM: … from underground tanks. So this is such a huge liability that I would never recommend you buy that house without having it properly addressed for all those reasons.

    AMY: Alright. Well, you know, we’re pretty far along in the process. We’re supposed to close next week and we’re kind of past the point of negotiations. And they had made a decent … a decent financial concession to us and – toward our closing costs – and then we had agreed that we would do this ourselves but we would do it before the close; and they agreed. And the difficulty I’ve run into is that, apparently, the fill valve for this thing takes a 90-degree elbow turn …

    TOM: Right.

    AMY: … and because of that, the guy’s telling me he can’t pump it out and the only way to get down to it, now, is the … is to dig it out, like you said. And what I’m wondering is if that’s … if that justifies reopening negotiations on this or if we’re … or if we’re just stuck.

    TOM: Well, it sounds like you’ve got your hands full there, with the baby. You don’t need another major thing to worry about after you get in that house; you want to enjoy it.

    My advice is if you’re working with an attorney, work closely with the attorney so you protect your legal rights; slow this process down, now, until this gets resolved. This is a major … potential major liability for you. I know you want to get in that house, but this has to be addressed. And if there’s new information that’s come up about the accessibility of the tank that you did not know when you made this agreement, then certainly that’s a good reason to reopen the issue and try to get it resolved.

    But take a breath; slow it down no matter what it takes. You do not want this liability on your hands after you close on the house; believe me. I’ve seen too many horror situations with leaky tanks that just came up way too late in the transaction.

    AMY: Okay.

    TOM: Alright, Amy?

    AMY: Alright, thanks for the advice.

    TOM: You’re welcome. Good luck.

    LESLIE: At least the baby sounded happy.

    TOM: Yeah, baby’s happy. But we want to make sure she sounds happy, too. I mean, really, I can’t tell you how many times I’ve seen this turn into an absolute nightmare; absolute mess. They’ve had to take out foundations because of these problems. Because the oil gets under the dirt …

    LESLIE: (overlapping) Well, and then think about the environmental implications.

    TOM: Well, right. But the oil gets under the dirt, under the foundation, and it just goes to no end. I mean they could be buying a house, here, that had a major leak that they may have to move out of for six months while they clean up the oil. I mean it’s just not worth moving forward on that house, knowing what they know now, without getting it completely resolved. And frankly, those homeowners should have done it before they even put the house on the market. But, you know, that wasn’t the best decision; but maybe they were lucky that Amy came along and almost closed on it without getting it straightened out.

    Amy, get it fixed then move in and enjoy the house. Thanks for calling 1-888-MONEY-PIT.

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