Saturday, October 31, 2015

Double Double OIL and Trouble!

Underground storage tanks... The mere mention makes my stomach jump!
Like many brokers working in areas with lots of old housing stock, I've seen some crazy situations with residential underground oil fuel tanks.  This year has been no exception!
Scenario 1;  Nice 70 year old lady inherits a rental house in an old established City neighborhood  after the death of her husband. It's a brick rancher from the 1950s and has been heated with fuel oil since built.  She's planning to sell and thinks this old oil furnace and oil heat could be a deterrent. So, she calls an HVAC contractor and buys a new natural gas system.  They come and install the new furnace and tell her they are also going to "abandon" the old oil tank. Seems all is well, right?  I list the house and I'm happy to tell potential buyers that this is taken care of.  One rainy fall night I get THE frantic phone call.  My seller is standing outside of said house in the rain with the fire department and the emergency response team.  The story?  The aforementioned contractor apparently hired Abbott & Costello to abandon the old oil tank.  While they were supposed to remove all of the oil from the tank before "closing" it, they apparently "thought" they could do that from the oil fill line inside the house which is 4-6 inches above the actual floor of the tank so that heat systems are protected from the "sludge" that forms at the bottom of the tank. Draining from the fill line empties the tank down to just that level...leaving 4-6" of oil sludge at the bottom.  Abbott, or maybe Costello, then dug down to the tank and cut open a hole in the top to fill with sand.  After filling, they weren't really prepared to properly seal the hole, so they just set the cut piece on top of the sand filled tank and covered it with soil and grass seed.  All done!  And then the rains came... The old tank sat just below the drip line of the house and the gutters were clogged with leaves and overflowing... onto the old tank location.  The ground saturated... the tank flooded... the oil sludge floated right up through the sand to the top of the tank... and right on out to grass and then right on down the hill in front of the house.  Neighbors were frantic when they called 911 about the big oil slick running down the yard toward the street from the house on the hill.  Fast forward 2 months.  My seller has been forced to hire a clean up team to remove all contaminated soil at the cost of $12,000.  The tank also had to be removed and the soil tested below.  It was positive, so they have to remove more soil and test again. Tests are still positive, but the equipment on site can't go deeper than 12 feet.  My seller and her environmental mitigation contractor are authorized NCDENR to stop digging, put in clean soil and begin the process of recording a Notice of Residual Petroleum (NRP) on the deed for her home and notifying all of the neighboring properties of same. In the end, my seller has fronted close to $20,000 for this whole process.  She goes after the HVAC contractor, and he ponies up just $4000.  She files for reimbursement by the state's underground storage tank fund (and 18 months later receives close to $12,000 back from the fund). She is out $4000. She finally sold the house in deep winter for considerably less than originally hoped.  But, the selling season was over... and there was a NRP notice on the deed... and she was worn out!
Scenario 2:  Another elderly couple owns a home on city water and sewer.  Back in the day (+/- 20 years ago), they had oil heat replaced by a gas furnace.  The oil tank was close the house and inside of a concrete slab, so they just sort of "left it" after the oil ran out.  Then, they build a sunroom addition... on top of that old slab.  Fast forward 20 years and I list their house.  I warn them about that oil tank and tell them they need to disclose it.  A potential buyer requires that it be properly abandoned.  They have to cut out the floor of their addition, drain the tank through the sunroom, fill it with concrete and then repair the floor.  The only other option is to tear down the addition and remove the tank with heavy equipment.
Scenario 3:  Nice couple heating with oil and the tank is close to their house (trend here!).  One day they smell oil.  After extensive visits, digging, etc, it is learned that their oil tank has sprung a leak.  It has saturated the ground, and then kept going to saturate the block of the foundation and then right into the basement slab.  Ultimately, they have to cut out a large section of basement slab and replace it, along with a large section of foundation wall.  Of course, they have to haul away all of that contaminated concrete and many loads of dirt and then bring in new dirt.  Final cost?  $60,000.  Surely they would be covered by homeowner's insurance?  NO - there's an exemption in most policies. They are able to file for partial reimbursement with the State's underground storage tank fund, but it covers only 1/5th of their expense.

Where else have we seen these tanks?  I've had one in a huge set of concrete steps leading to stone house's front door. I've seen one in a concrete slab front porch.
Moral of the story?  If you have an underground storage tank, deal with it now regardless of the hassle!

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