Underground fuel tank contingency?

Question

I'm considering making an offer on what I think is a good deal. Its a sfh that I would like to brrrr. 25,000 list price , 70,000 arv, will rent for 1,100.Viewed the property today and it has an underground fuel tank that was discovered by a previous buyer's home inspector that then caused it to fall out of contract. The seller is unable/ unwilling to remove and or remediate the tank and is selling the property "as is". I've read through some forum posts and see that if the tank isn't leaking it could cost 2 or 3 thousand ( this works with my numbers). If it is leaking it could be five or six figures to deal with. Are there any creative strategies for writing an offer with a contingency to protect myself from this big downside. I'm considering an offer where I pay for the inspection/removal of the tank before closing and walking away if there is a leak. Still gambling with 2 or 3 grand though. Any ideas?

Lawrence P. Schnapf · Answer

The Department of Environmental Conservation (NYSDEC) and the Oil Spill Fund have interpreted the NY Oil Spill Act (formally known as article 12 of the Navigation Law) so that if the tank is in the ground when you take title, you would be considered the owner of the tank for liability purposes. If you are an innocent party, you can seek reimbursement from the Spill Fund.So it would make sense to have the tank removed prior to the closing. Then, you could perform cleanup under DEC oversight and file a claim for reimbursement from the Oil Spill Fund.

Bryant Naylor · Answer

@Steven D'Agata long story short, we were buying a house with an old underground tank and PAID $500 for it to be inspected. It ended up having leaks and bc it was discovered, the owner of the property had to admit it and take any/all future responsibility for environmental issues that could arise. We then purchased the property and had the tank removed and an above tank installed to code. Hope this makes sense. Cheers. r/Bryant

Marci Stein · Answer

@Steven D'Agata. I have no interest in the Liberty area any more . Too hard to find reliable tenants. I know the house from years ago . It’s cute .

Steve Morris · Answer

Go talk to a contractor on remediation. Some places allow you to fill with sand and plug it.Some more "enlightened" places like OR, require you to remove it and keep taking out dirt until you get clean dirt all around. Seems like a cost thing to me.

Steven D'Agata · Answer

@Marci Stein. Yea thats the one. Thats impressive, I guess you are very familiar with the area. Did you look at this one and pass it up already?

Steven D'Agata · Answer

@Mark Smith Thanks for the ideas. Seems like 1 is the best option.

Marci Stein · Answer

I’m extremely familiar with the liberty area - is this the Jordan st house? I have found many homes for $30,000 without underground tanks . that should give you much leverage, if the seller doesn’t agree to your terms

Mark Smith · Answer

Once you own the property, you own the environmental risk that comes with it. Force the mitigation before you buy or walk every other buyer will do the same if they have any savvy or are being helped by a marginally competent attorney or realtor. Your options as I see it: Have your attorney write up a contingency something like a credit of 3K will be granted from buyer to seller at closing with confirmation a licensed storage tank contractor under a permit has removed the tank and all landscaping restored. If the work has not been completed by closing, the buyer can walk with the earnest money.You could negotiate a five digit escrow at closing to mitigate this risk ( unlikely the seller will agree I'm sure)You could gamble buy it and hope there is no contaminationYou could require the seller to produce a recent Phase 2 environmental showing no spillage or ground contamination and with that buy it and remediate the tank yourself If the seller balks at options 1 or 2 or 4, then all you can do is watch the listing age out and test the seller for motivation every month or so. If door number 3 looks good to you then drive on and I hope that works out for you.The beauty of option 1 is you are not out any money upfront and you've capped your risk to 3K, if the seller bites and initiates the work and opens a can of worms, the seller still own the risk. If presented to the seller as "If I paid you 2K at closing to remove the tank before closing, would that work for you? Ok how about 3K? Good done." Even if you went as high as 5K it may still be worth it since it caps your risk. If the seller is totally resistant to this then they may know the big answer already, there was a leak.