Underground Heating Oil Tanks

Underground Heating Oil Tanks

Every time I write a contract and hit the question about underground storage tanks, I still think: who out here has one of these?

Then I remember the answer is plenty of people. They're more common around here than anyone expects, and they come up in inspections constantly, usually with a buyer who has no idea what they're looking at.

The Fort Washington one that got flagged

I had a listing where the seller had an above ground tank. Disconnected, not in use, just sitting there.

She'd done the responsible thing. Stopped using it, switched over, moved on.

The appraiser flagged it anyway. Not because it was leaking. Because it was no longer in use and still on the property.

That's the part people miss. A tank you've stopped using is not the same as a tank that's been dealt with. Disconnected and abandoned in place is its own condition, and it shows up on appraisals, in lender conditions, and in buyer negotiations.

She had to address it late in the process, under time pressure, which is the most expensive moment to address anything.

Here's why nobody warned her

This surprises people, and it explains most of what goes wrong.

Tanks storing heating oil for consumptive use on the premises are excluded from federal underground storage tank regulations. State or local agencies may regulate them, so that is where to check. EPA

Which means the rules that govern gas station tanks don't apply to the one buried in a back yard. The exclusion sits in the Resource Conservation and Recovery Act, alongside farm and residential motor fuel tanks under 1,100 gallons. US EPA

You can read the EPA's own explanation here: Frequent Questions About Underground Storage Tanks

So no federal agency requires you to monitor it, upgrade it, or remove it when you stop using it. Nobody sends a letter. Nobody follows up.

That sounds like good news until you're selling. Because the absence of a regulator does not mean the absence of a problem. It means the problem stays invisible until an appraiser, a lender, or a buyer's inspector finds it, and by then you're negotiating under a deadline.

Maryland, DC and Virginia each set their own rules, and local building and fire codes can apply too. Check yours.

Why they matter

The concern is environmental. A leaking tank can contaminate the soil around it and reach groundwater, and the cleanup is not a small bill.

Leaks usually come from rust inside the tank, or from an electrical condition sparked by nearby utility lines.

Underground makes it worse, because you can't see the problem. A steel tank in the ground for forty years is doing what steel in the ground does, and nobody notices until something turns up in a soil test or a buyer's inspection.

If you're buying

Get it inspected. Not a general home inspection. A tank inspection from someone who does tanks. You want to know it's sound before you own it, because after settlement it's your problem and your cleanup cost.

If you don't want it, you have options. An above ground tank can be installed in the basement and the underground one shut off. Existing contamination still has to be cleaned up, and that gets negotiated before you close, not after.

Put it in the contract. Whatever's agreed about the tank, its condition, and who handles what goes in writing. A verbal understanding about a buried steel tank is not an understanding.

If you're selling

Deal with it before you list. That's the whole lesson from Fort Washington.

Know which category yours falls into: in use, disconnected, abandoned in place, or properly decommissioned. Those are four different conditions with four different conversations attached.

If it was decommissioned, find the paperwork. If it wasn't, get advice on what that means for your sale before an appraiser tells you at the worst possible moment.

Your attorney should confirm the description and condition are accurate and current in your disclosure. Getting this wrong is not the kind of mistake that goes away at settlement.

What I'd tell either side

The tank itself is rarely the deal breaker. Surprise is.

A tank identified early, inspected, documented and negotiated is a line item. The same tank discovered eleven days before closing is a crisis, and crises get resolved on whatever terms are available at the time, which are never the terms you'd have chosen.

If there's a tank on a property you're buying or selling

As a Broker Associate serving Fort Washington, Prince George's County, Anne Arundel County, Montgomery County, Washington, DC and Northern Virginia, I'll tell you what needs to happen and when, so it gets sorted early instead of in the last two weeks.

Visit HireConcierge.com to request your Home Wealth Snapshot and consultation.

Travell Eiland, Broker Associate, The Concierge Agency. Making Real Estate Dreams Come True.