How to handle a property with an underground storage tank

QUESTION:  I have a property listed for sale. The property was once heated with home heating oil and there is still an underground tank buried in the yard. The property owner has asked me several questions about the tank including whether its presence needs to be disclosed, and whether there is any obligation to remove the tank. What are the obligations of the property owner and the listing agent in this situation?

ANSWER:  The Residential Property and Owners’ Association Disclosure Statement specifically asks if there are any underground storage tanks located on the property. If this question is answered affirmatively, or if the “No Representation” box is checked, prospective buyers may well hire a professional to investigate. Since potential buyers may be reluctant to purchase property with a UST, removal of the tank may be a good idea, even if there is no evidence of a leak. However, removal of home heating oil tanks is not required if no leak has been discovered.

Unlike commercial USTs, home heating oil tanks are not regulated. Among other things, this means that they are exempt from “closure” requirements. “Closure” of USTs means removing the tank from the ground or filling an empty tank with a solid material such as sand, and analyzing the surrounding soil. Even though these closure requirements do not apply to home heating oil tanks, property owners are advised to empty a tank that is no longer being used in order to limit the chances of a release.

If a property owner chooses to remove a tank, they should contact their local fire inspector’s office as it may regulate the removal process. The property owner does not need to contact the North Carolina Division of Waste Management unless he or she discovers signs of a leak, spill or contamination.

The presence of a leak, spill or contamination is clearly a material fact that a listing agent must disclose to all interested parties. However, real estate agents are not trained environmental professionals and would not be expected to discover a leak or spill, unless there are some obvious signs or “red flags”.

Because of a buyer’s potential liability for future cleanup costs, the North Carolina Real Estate Commission takes the position that the presence of a UST is a material fact that must be disclosed, even in the absence of a leak. This obligation arises when the presence of the tank is known to the agent, or should have been discovered by the agent in the exercise of reasonable diligence.  Since you have actual knowledge about the tank, you would be required to disclose its existence to interested buyers even if the seller chooses to make no representation about the tank in the Disclosure Statement.

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