Should I buy a house with an underground oil tank?

Buying a house with an underground oil tank

You can buy a house with an underground oil tank once the tank passes a leak test. Book the test before your inspection deadline and build your request on the result. A test costs far less than a leak: cleanup can run tens of thousands of dollars, according to New York's Department of Environmental Conservation (DEC).

Key takeaways

• At one New Jersey and Pennsylvania tester, a leak test report comes back in one business day. Lab soil results take 3 to 5 business days.
• On one New England contractor's figures, removing a 275-gallon tank with soil testing runs $3,200 to $4,500, before any cleanup.
• Many homeowner's policies carry a pollution exclusion, so a leak after closing can land on you.

How serious is a buried oil tank?

Serious enough to test every time. The International Association of Certified Home Inspectors (InterNACHI) says buried petroleum tanks "may pose a safety hazard to those living in homes nearby and significant financial liability to the owner." Leaked oil sinks through the soil and can reach the water table. Because corrosion is usually slow, a tank can leak for years. Homes on well water are at particular risk.

Age raises the odds. DEC says "the likelihood of a leak increases as the tank gets older." Many buried home tanks are 275-gallon steel tanks that DEC says "were not designed to be buried" and, left in place, "will eventually corrode and leak." A tank that no longer heats the house still counts. InterNACHI tells inspectors to recommend a leak test "especially if testing has never been performed, the tank is unused, or the tank is old."

A pass is not a guarantee. DEC warns that "no test can predict what will happen next year, next month, or even the next day."

Who tests the tank, and how long does it take?

Your home inspector should note the tank and whether it is in service or inactive. A tank-testing contractor runs the test. Ask for a written pass or fail result, not a verbal opinion.

Turnaround depends on the test. ATS Environmental, a tester serving New Jersey and Pennsylvania, sends a written report one business day after a leak test with an on-site soil screen. Its version with lab soil analysis takes 3 to 5 business days for the soil report. Call a tester the day the tank shows up on your report, and get the turnaround in writing. How to get repair estimates during the inspection period covers booking fast.

What does an underground oil tank inspection cost?

An oil tank inspection runs $300 to $700 from one Long Island tester and $500 to $1,500 on a California directory, depending on what it covers.

The spread is mostly scope and region. Ask each tester which checks the price covers before you compare quotes.

How much does it cost to remove or replace an underground oil tank?

Replacing a buried tank means pulling it and installing a new one, either underground or aboveground in a basement, garage or shed, as DEC describes. Removal and soil testing are separate lines, and cleanup only applies if the tank leaked.

Take CommTank's 275-gallon tank after it passes its leak test. Removal at $2,000 to $2,500 plus soil testing at $1,200 to $2,000 comes to $3,200 to $4,500. If you'll keep oil heat, add an aboveground tank at $3,000 to $5,000, for $6,200 to $9,500. Curren's Pennsylvania figures run lower: $1,900 plus two or three samples at $220 each is $2,340 to $2,560. The leak test is a separate, earlier bill. If the soil test finds oil, cleanup comes on top.

Leftover oil, local permit fees and access to the tank all move the price, so a contractor's written bid for your tank replaces these numbers. Kept prices every line of an inspection report for $79, usually under 4 hours, and marks the ones that need a professional quote.

What should I ask the seller for?

Ask the seller for any past test results or removal permits. Then let your test result set the request:

• Tank passes: ask the seller to remove it with soil testing before closing, or for a credit that matches a contractor's written bid. Ask for the tank closure report that documents the removal.
• Tank fails or the soil shows oil: ask the seller to remove the tank and clean up before closing. InterNACHI says a leak "should be remedied before the property is purchased."
• No result before your deadline: treat the tank as an unknown, not a small line. Ask for a leak test before closing, with removal and cleanup by the seller if it fails.

What to ask for after a home inspection shows how this fits your list, and the buyer repair request letter template gives you the wording.

What if the seller says no?

If the seller says no, you can take the house and budget the bid, or cancel. Your contract sets the exact dates and terms, so confirm them with your agent or attorney.

Weigh the tank against your own sale later. DEC says that when you sell, "a bank or the buyer likely will ask for an environmental assessment or the removal of the tank." When to walk away after a home inspection helps you weigh a line like this against the rest of the report.

Are underground oil tanks illegal?

Federal tank rules don't reach a tank that heats the house it serves. The Environmental Protection Agency (EPA) lists tanks "storing heating oil used on the premises where it is stored" among those that do not need to meet federal requirements. EPA adds that "some state and local regulatory authorities may regulate these types of tanks." Your state's environmental agency or local government answers for your address.

Does homeowners insurance cover an underground oil tank?

Your homeowners insurance may not cover a tank leak, so check before you close. DEC warns that many policies carry a "pollution exclusion" clause, and with one "you could get stuck with the bill." Ask your insurance agent in writing whether a tank leak is covered.

What else on my report needs a price?

If your report flags more than the tank, price every line before you send one request. The tank then sits next to the rest of the list instead of crowding it out.

If the tank is one line of a long report, upload your inspection report to Kept so your days go to the tank test and the removal bid.

Sources

• InterNACHI, Underground Fuel Storage Tank Hazards and Inspection
• EPA, Learn About Underground Storage Tanks
• New York DEC, Underground Heating Oil Tanks: A Homeowner's Guide
• ATS Environmental, underground oil tank testing
• Eastern Environmental, oil tank inspection before selling on Long Island
• UST Contractors, oil tank inspection and testing in California
• Curren Environmental, oil tank removal cost in Pennsylvania
• CommTank, buying property with an abandoned underground tank