Underground Oil Tanks

[Moshe Eisenberg]

The following is a quick guide on how to deal with underground oils tanks "before giving a deposit" on a property. 1- The day you see a deal looks like it's a deal for you, order an oil tank sweep (which in north jersey costs around $200). Should be able to get it done within a day or so. 2- If there is no tank good. If there is an underground oil tank, you will need to address it by either # 4 or 5, if you don't have luck with # 3. 3- Check in the local building department if the previous owner took out permits to properly decommission the oil tank. If yes get the paperwork from them. You will give these docs to the lender and to the future buyer. 4- Order Soil Borings and testing. (In north jersey It costs around $550) it takes about a week to get the results back from lab. If results are clean great. If not, do not touch the deal. No one can predict how much it will cost to remediate the soil. 5- Have the oil tank removed. Preferably have the current owner agree to have it removed before closing (the "lender requirement" excuse usually works well). You might wanna offer to pay up to a few thousand dollars to pay for the tank removal. Bank owned properties usually don't agree to this so in order to do this you will need to be creative... If while removing tank you discover contamination walk away from the deal. If it's clean go ahead. This is based on my experience. I would love to hear if anyone has any comments or suggestions. Moshe

[Steve Buchanan]

@Moshe Eisenberg I found soil contamination at a property I was in escrow on recently in north Jersey and decided to go through with it. We closed a few weeks ago and have begun the remediation process. This is the scenario followed by my reasoning. The jury is still out on whether or not it was the right decision. 

While in escrow I had soil boring done and samples came back with an EPH reading of 8700 mg/kg. Allowable level is 1000 mg/kg. First I sent the results to the seller (Fannie Mae) to get them to remediate. They wouldn't. Then I sent the results to several soil remediation companies to start getting estimates for the job. Estimates came back between $8k-$12k and each company covered themselves by saying once they start digging it could always be worse and price could go up. These estimates were only a baseline. General consensus from the companies was that 8 out of 10 times the work is done at the estimated price, 1 out of 10 times it comes out to a few grand more and 1 out of 100 times we have a much bigger problem. 

I sent the $12k estimate to the seller and ended up negotiating a credit of $20k off the purchase price and we closed. 2 weeks ago we started soil remediation with a company that had given us a $9k estimate. As the tank was removed and minor digging occurred the company believed the contamination to be very minimal after examining the site. They were optimistic that they only had to dig out a few buckets of soil which would make the cost significantly less than $9k. That's exactly what they did and finished up in just a few short hours. They said we were really lucky and that they would send some new soil samples they thought were clean to a lab and as long as the results came back clean we would be good. 

Well 2 days ago the results came back and it turns out the "clean" soil is still contaminated which means we have to dig further. Not only that but our gas and water lines are in the way so they will both have to be cut and removed prior to digging and then replaced afterwards. 

This is where we are now. I'll update once further action is taken.