Who gets the fuel if the tank is leased and not owned by the seller?
QUESTION: My seller has a leased propane tank. The buyer does not want to continue leasing the tank from the current vendor, so my client wants to schedule the fuel company to come and remove the tank on the Settlement Date. The seller also wants to either send the buyer a bill for the fuel or get a credit back from the fuel company. Since the tank is leased, is the buyer still entitled to the fuel remaining in the tank?
ANSWER: Unless the parties agree otherwise in writing, the buyer is entitled to receive any fuel remaining in the tank at Settlement at no additional cost, and the seller cannot have the tank removed before Closing is complete.
The Offer to Purchase and Contract (Form 2-T) treats ownership of the fuel tank separately from ownership of the fuel inside the tank. If it’s leased, the tank does not convey, and the buyer will need to make arrangements for another tank if they are not going to use the same tank. Form 2-T also provides that any fuel remaining in the tank as of Settlement belongs to the buyer and is included in the sale as part of the purchase price, free of liens. The seller may continue using the fuel in the ordinary course of owning the property before Settlement, but the contract provides that the seller may not otherwise remove or resell the fuel prior to Closing.
Agents should note that Settlement and Closing are not the same thing in Form 2-T, and they may occur on different days. Settlement is the delivery of documents and funds to the closing attorney, which must be completed by the Settlement Date. Closing is the completion of the transaction, which includes updating the title, completion of Settlement, the receipt of authorization to disburse funds, and recording the deed.
In your case, the buyer owns any and all fuel in the tank as of Settlement and has no obligation to pay the seller for the fuel. Since the seller must provide existing utilities through Closing, then the seller should not have the tank removed until Closing is complete, which includes all the items mentioned above.
The parties can, of course, negotiate a different arrangement, which must be in writing and signed by both buyer and seller. If the parties agree that a leased tank will be removed before Closing, the parties should address that issue as early as possible. In many cases, they may negotiate an alternative arrangement, such as having the seller compensate the buyer for the value of any fuel removed when the leased tank is retrieved, and then that arrangement can be documented on the closing disclosure statements.
Listings agents are encouraged to speak with sellers early about this issue, and make sure that the seller understands their obligations under Form 2-T. The seller may want to factor in these obligations when they negotiate contract terms. Buyer’s agents should similarly make sure the buyer’s intentions are communicated as much as possible to the listing agent so that fuel and tank issues can be coordinated during the transaction.
Release Date: 7/30/2026
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