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Oil tank contaminated soil/clean up costs
Just got a call from a seller in New Jersey, who had a below ground oil tank removed but the soil is contaminated.What would be a rough estimate to clean up the contamination?
From experience
Walk away,
I don't know if I would touch that one. The costs could vary depending on the contamination. I had a friend who recently had to deal with that on his house in Clifton. It was $17,000 to remediate the soil after the oil contamination. It also was a long process to get completed due to the EPA. It took a long time to get soil sample approval since the EPA was backed up and under staffed. The oil tank was under his front porch, so he had no front steps for months on end.
Hi Sydney.He does seem pretty motivated.That bad,huh?
It all depends how much you can profit. If there's a great spread like a wholesale deal then I would start calling around. Get an estimate and use that towards negotiating down further. The seller might not be happy but when you solve their burden I bet you get a hug.
Plus side... You'll now be an expert on oil contamination and we'll come to you for answers :)
Natedog
Solid advice,Nathan.Thanks
I grappled with this problem a while ago (there is thread on my particular situation somewhere on this forum). I ended up asking for a 50% reduction in price to take on the risk and the deal fell apart. Property is still on the market.....
The problem with this is that in many cases, you might be able to clean it up for 10-20k (sometimes even less), However, the downside is essentially open-ended. If the contamination spread to neighboring properties, or if there are any water wells anywhere nearby, it could cost hundreds of thousands of dollars to fix - if it even can be fixed. Once you own the property, you own the problem and you'll have to disclose it to any potential buyer down the road.
That said, if the deal is worth the risk, and you have the stomach to deal with it, the property could still be worth pursuing. There are several folks here on the board who seem to do quite well with such situations. For me, it's too much potential downside.
Thanks,Andrew.Sounds like it could be initially difficult to determine the extent of the contamination.
It's like placing a bet of 1.00 to make 10 cents versus placing a bet of 1.00 to make 500.
REWARD vs RISK and time to get there.
In commercial real estate environmental doesn't scare away buyers as much if location is good because of large spreads. With houses and tighter margins it sinks many more deals.
I have dealt with this many times... I have had a number of tanks removed to which the soil was contaminated and one where I purchased a home next to a tank that leaked and spread to my property. If there is truly a contamination and it was found by a legit firm it is registered with the state. As noted in a prior post until real good soil testing is done there is little anyone can do re the cost guesstimate at best. Even after the soil testing is done the contamination can be leaching well beyond the tank site. That said all of my tanks I have removed because of leaking was resolved by soil removal only. On the other hand my neighbor is still perking the soil and groundwater 3 years later. He claimed bankruptcy and his insurance co is handling the contamination as he exceeded his coverage limit.
Don't gamble. Walk away. I had a home that I bought from the bank that was in foreclosure. I made the bank clean it up before I closed. Cost them 25k to 30k. I am out of attorney review now on a new purchase any my tank sweep found a metal object on my neighbors property but very close to our property line. I had my lawyer put in the contract the next door home (same seller) pull the tank before I close just in case it leaked onto my property. I can get out if they find it leaked. Don't risk it. Make the seller clean it up first with all proper paperwork; then you can think about purchasing it.
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Patrick Reagan I would not touch that. There is a fantastic flip opportunity by me that has been on the market due to contaminated soil. Nobody is touching it for the past 3 years already and there are a ton of experienced cash buyers here. I don't even recommend buying homes with underground oil tanks. To me it seems like too much of a gamble and the insurance around those ticking time bombs is very equivocal in my opinion.
Originally posted by @Andrew S.:I grappled with this problem a while ago (there is thread on my particular situation somewhere on this forum). I ended up asking for a 50% reduction in price to take on the risk and the deal fell apart. Property is still on the market.....
The problem with this is that in many cases, you might be able to clean it up for 10-20k (sometimes even less), However, the downside is essentially open-ended. If the contamination spread to neighboring properties, or if there are any water wells anywhere nearby, it could cost hundreds of thousands of dollars to fix - if it even can be fixed. Once you own the property, you own the problem and you'll have to disclose it to any potential buyer down the road.
That said, if the deal is worth the risk, and you have the stomach to deal with it, the property could still be worth pursuing. There are several folks here on the board who seem to do quite well with such situations. For me, it's too much potential downside.
what if the testing showed there was contamination. Could you buy insurance after that and if it anything came up the insurance covers it?
