DIYbanter - View Single Post - Regulations Governing Underground Home Heating Oil Tanks

George

On 5/3/2010 11:18 AM, wrote:
On Mon, 03 May 2010 11:03:52 -0400,
wrote:

On 5/3/2010 10:45 AM, wrote:
On Mon, 3 May 2010 07:28:52 -0700 (PDT), wrote:

On May 2, 5:37 pm, wrote:
On Sun, 02 May 2010 14:17:55 -0400,
wrote:

On 5/2/2010 10:02 AM, wrote:
On Sun, 2 May 2010 06:57:46 -0700 (PDT), wrote:

On May 1, 11:45 pm, wrote:
On May 1, 11:10 pm, wrote:

A friend is trying to sell her house. The house has an old steel tank
(15 years) that is not leaking.
Prospective buyers that come to the house say they were told a
bank won't approve a mortgage and/or they can't get homeowners'
insurance with the underground tank. This is in RI.
The person is considering removing the tank and replacing it with
an above ground tank, but this will require rerouting of the line,
tearing up the driveway etc. I say the issue is not the underground
tank per se but the fact that it is so old and that she should
replace it with an underground fiberglass tank. She could then show
the buyer, the bank and the insurance co the bill of sale and the
warrranty.
In your experience have you ever heard of mortgage/insurance co
problems if it can be proven that the underground tank is new and
non-corrosive?
Thank you.
Frank

Sounds like its time to dig the tank up and convert to natural gas...

Underground tanks are a huge liability because they often never
get inspected when used in homes and can have been leaking
for many many years when the homeowner finally starts to
realize that they are running through the oil in the tank faster
than they used to...

~~ Evan

An even better source would be to simply ask the buyers to put the
seller in contact with the actual insurance company and mortgage
company and ask them for their position. There is no question that
having been burned, many of these companies have tough reqts regarding
underground oil tanks. Even if the tank is fiberglass, that doesn't
guarantee that an underground fitting won't leak. Or the lines
between the tank and furnace. What one company will be OK with can be
different than another company.

Alternatively, call up some insurance companies and ask their
position. If you find one that says they will inure a new fiberglass
tank, you may have half the problem solved. On the other hand, you
have to also assess whether in this market, it's not better to just
bite the bullet and put in an above ground tank or if possible,
convert to gas. How much difference in cost can it be to put in an
above ground tank versus a buried one? I'd think the above would
actually be less expensive.

Underground tanks are not an automatic problem. Every gas station in
the US has one or more of them.

Major difference. Gas station tank installations have specific
requirements about allowable time in service and leak detection
equipment.

Yeah? So?

A 15 year old home heating oil tank is not a big deal, and if push
comes to shove, is generally not a big deal to replace. The insurance
company will insure the new tank and the mortgage company will make a
mortgage. Yes, it will cost more to replace than a tank in the
basement. Not the end of the world, though.

If you own a house with an underground tank, you can always do a
little homework yourself so that when someone raises the objection,
you have FACTS with which to respond.

Or, you can wring your hands and not sell your house.

"someone told me" is not enough to go on.

Apparently, doing a little research is exactly what the poster is
doing. It may not be a big deal to YOU, but if the buyer says that it
is a big deal to both the mortgage company and the insurance company,
then it's up to you to decide how marketable you want your house to
be. A 15 year old underground tank IS a big deal to me too, and
having seen many horror stories where lots became major environmental
cleanups that cost huge amounts of money, as a buyer, I'd be looking
at other houses that don't have this potential problem. And if it
was a truly unique house that had so many other redeeming virtues, I'd
insist on thouroughly testing the tank and provided it passes, a
discount sufficient to replace the tank anyway.

In today's market you think it's smart to be arguing "facts" with
buyers instead of just spending a few thousand to get rid of the
tank? That's all it's gonna be right? Because you as seller are
100% sure the tank isn't leaking and when they dig it up it's suddenly
going to go from $3K to $50K?

More FUD

So how much does it cost to do a leaky tank remediation where you are?

So far, we have ZERO evidence that we are talking about a leaky tank.
In fact, based on the information we DO have, it is highly unlikely
that the tank is leaking.

The discussion was about the potential of an underground tank leaking.
It does happen and it is expensive to remediate. Since it is a buried
tank how is someone supposed to know?

Other than that, we have an unverified report that one potential tire
kicker claimed that one mortgage compaany and one insurance company
had a problem just because of the existence of this tank, and
apparently was not open to the idea of first checking the tank, or
possibly removing it, before saying they would have nothing to do with
the deal under any circumstances.

So how much would it cost to dig up and inspect the tank? Who is even
going to "certify" an old tank since that would mean they are accepting
the liability for it?

It isn't even unheard of for insurance companies to refuse to insure old
above ground tanks anymore. Many will not even consider writing coverage
if you don't have a recent double wall tank.