Never say “never” – The UST (underground oil storage tank) you never thought (or knew) you had.

What lurks below?  The trouble with underground fuel storage tanks (UST)

Most homes built before 1990 feature oil heat systems with an oil tank conveniently tucked out of the way underground.  Easy to fill with a tanker truck and a long hose, the metal tanks quietly did their jobs producing fuel oil to the home’s furnace to keep everyone nice and warm.  The trouble is that, over time, the metal starts to corrode and occassionaly small holes were opened in the rust and corrosion.  The slow leak formed and year after year, homeowners dutifully filled the tanks to prepare for winter and sometimes filled twice per season.  Unknowingly, oil slowly dripped out of the tank contaminating the soil year after year.  In the worst of cases, the oil seaped into underground water and travelled to contaminate neighboring properties or streams.  In 1972, Congress passed the Clean Water Act establishing a nationwide approach to improving the quality of our nation’s lakes, rivers, streams, and other water bodies.  As concern for the environment grew, the sources of contamination began to be rooted out.  In the 80’s, 90’s and early 2000’s, utility companies began offering incentives to switch over to natural gas heating systems as a cleaner and safer alternative.  When homeowners made the switch, the industry standard for many years was to ‘decommission’ the underground tank by emptying its contents, filling with sand and leaving it in place.  Municipalities approved of this process and issued approvals for the decommissioning.  Once the tank was filled with sand, much of the evidence that there had ever been an underground tank was innocently removed for aesthetics such as the outdoor fill pipes removed as obsolete and, quite frankly, an eyesore.

In 1995, the New Jersey Department of Environmental Protection (NJDEP) issued a bulletin recommending the Removal/Abandonment Requirements for Residential Heating Oil Tanks.  While noting that there is no legal requirement that tanks be removed, many mortgage companies and home insurance companies were beginning to require removal by any new purchaser.  In the 2010’s, technology finally caught up and a new industry was born to conduct tank sweeps by magnetic resonance imaging using specialized equipment.

The New Jersey Realtors Standard Form of Real Estate Contract does not explicity require the removal of a UST.  However, the Inspection Contingency Clause in Paragraph 16 (A) does include UST as a possible environmental condition that may affect the Property.  The relevant provision states:

Moreover, Brokers and salespersons similarly have no special training, knowledge or experience with regard to evaluation ofpossible environmental conditions which might affect the Property pertaining to the dwelling, such as the existence of radon gas, formaldehyde gas, airborne asbestos fibers, toxic chemicals, underground storage tanks, lead, mold or other pollutants in the soil, air or water.

And this makes the UST a villain presumably just as bad as asbestos, toxic chemicals, lead and mold.  That’s a problem that no Buyer wants to inherit.

Most Sellers have no idea that whether a UST is located on their property and are surprised when the tank sweep reveals the ‘anomaly’ in the same shape as a tank.  My advice is to expect the unexpected.  A prudent Buyer (and/or their highly professional attorney) will require the removal of any tank.  As my wife would say “you get what you get and don’t get upset.”  If you are thinking of selling your New Jersey home and you didn’t have the tank pulled when you purchased the property, it is recommended that you order a tank sweep as part of your pre-listing preparation.  Be proactive.

The process is manageable but it does take time.  The environmental contractor, licensed by the state to remove tanks, will need to apply for a permit from the municipality, schedule the removal and inspection by the municipal inspector and account for the scrapping of the metal tank.  If there is any indication of corrosion or holes in the tank, the contractor will also need to take soil samples and send to a laboratory for testing.  If contamination is found, a NJDEP case is opened right away. That takes several days.  If the laboratory analysis returns levels that exceed that the NJDEP allowable levels, the contractor will need to remediate by removing contaminated soil until they no longer suspect the presence of contamination and then re-test the soil.

The contractor will then need to prepare a Remedial Action Report that is submitted to the NJDEP for review.  If the NJDEP is satisfied with the remedial action taken, they will issue a No Further Action letter commonly referred to as NFA.  In my experience the timeline and estimated expenses are:

Permit application and issuance – Depending on the municipality anywhere from 3 – 21 days.

Tank removal by Contractor – Usually performed in one day.  The cost can range from $2,000 – $5,000

Soil Sample Analysis – 7 – 10 days

Remediation – Typical costs range from $4,000 – $10,000 depending on the level of contamination.  The horror stories are where contamination has infiltrated underground water and clean-up costs are over $100,000.  After more than 20 years of practice, this worst case scenario is an extremely rare situation.

Following the remediation, additional sampling and laboratory analysis is performed and a Remedial Action Report is drafted.  These are lengthy reports that are estimated to cost an additional $2,000+ and can take up to four weeks.

Once completed, the Remedial Action Report is forwarded to the New Jersey Department of Environmental Protection for review which requires a $400 fee payable to the NJDEP.  The process has been streamlined and the No Further Action Letter (NFA) is usually received in 3 – 4 weeks.

The Lloyd Law Office has assisted more than 100 homeowners with the removal of underground tanks in connection with the purchase/sale of property.  We are well versed in the process and the requirements.  Our goal is to help everyone close on schedule with minimal delay.  We will always recommend a pro-active approach.