Important Tips:
Be sure that attorneys for both sides agree on the testing method to be used.
Contact a local FMA member-dealer, who can often perform the test or suggest a reputable contractor — an improperly done test has no value.
This also holds true if cleanup or removal is necessary. Unfortunately, there are many "scams" being used by untrained people claiming to be experts. Their main incentive is "finding" a problem to clean up.
We learned that your clients and prospects increasingly look to you for advice on heating issues. But these issues are getting more and more complicated in New Jersey, especially where storage tanks are concerned.
In response, we gathered the information in this booklet to give you a head start in answering the questions you will be asked today and in the future.
If questions come up that aren't covered here, remember:
The Fuel Merchants Association and FMA member-dealers are here for you and the people you do business with. We're always happy to help you out.
Probably no subject draws more attention these days — or is more misunderstood — than underground storage tanks.
Q: With all the fuss about tanks, how extensive is the problem?
A: This is a situation where a few highly publicized cases have created a distorted impression of reality. One study found that fewer than 2/10ths of 1% of all underground heating oil tanks are leaking. Another showed that any oil that does leak out will not migrate more than 16 feet unless moved by groundwater.
Q: If a tank does leak, how much is cleanup likely to run?
A: Contrary to the big numbers reported in the media, experience shows that cleanups have actually averaged less than $5,000.
Q: Is there any type of protection to help pay for the cleanup of a leak?
A: Yes. Many oil dealer now offer service contracts for active oil tanks. Usually, they provide up to $100,000 for cleanup of the leak. These contracts are transferable to the home buyer at closing and typically cost less than $60 a year.
Q: Is there a problem getting homeowners' insurance with a buried tank?
A: No. Only one carrier is reluctant to cover homes with buried tanks and it is already reconsidering its policy.
Q: What is the life expectancy of an underground oil tank?
A: It depends on the materials used in building the tanks and on the chemical composition of the soil in your area. Most tanks last for many decades without problems.
Q: Must buried tanks be removed?
A: Not active tanks. And probably not even inactive tanks. Active residential oil tanks (regardless of size) are not regulated by the state of New Jersey. (Don't get home heating oil tanks confused with commercial gasoline tanks!) They don't have to be registered. And there are no state or local requirements to remove any active home heating oil tank.
Inactive tanks, however, must be properly closed. Closing normally involves emptying the tank of oil and either removing the tank or filling it with an inert material like sand, which keeps it from collapsing. The local building department will determine which method must be used.
Q: What are the homeowners' responsibilities and liabilities if oil leaks from a tank?
A: It depends on the concentration of oil in the soil. In cases where saturation is low, the DEP permits the oil to dissipate naturally.
Otherwise, proper cleanup and soil disposal will be necessary. The current homeowner is liable for paying these expenses unless he can prove that the leak occurred prior to his taking title.
Q: How can a buyer prospect know if an inactive tank has been closed properly?
A: Ask the seller for the name of the firm that performed the tank closing or for copies of necessary local construction permits. Otherwise, excavation and testing may be required.
Q: What are the warning signs that an active tank may be leaking?
A: Look for two key signs: water in the oil or a significant increase in fuel use (another good reason to be on automatic delivery — an oil dealer will quickly detect the problem).
Q: What are the most popular tank testing methods?
- Soil testing, where subsurface soil on all sides of a tank is examined for oil contamination;
- Vacuum testing, where a vacuum is created within the tank. If the vacuum holds throughout the test, no leaks are present;
- Volumetric or tightness testing, where the tank must hold a specific pressure for a period of time. However, according to one study, such testing may cause piping leaks.
Note: New, safer testing methods are constantly being developed. Options should be discussed with an FMA member-dealer.
Q: How much does testing cost?
A: Prices range from about $500 to $700, but an oil dealer can supply specific information for your area, as well as the names of trained tank testers.
Caution: Improper testing can cause leaks. Please advice clients or prospects against trying to do testing themselves.
Q: Is there a legal requirement to get a tank tested to sell or buy a home?
A: No, but more and more attorneys and lenders seem to be insisting that all underground tanks be tested, to protect buyers from inheriting problems.
Q: Can a test tell if a tank will leak in the future?
A: No. All tests are simply a snapshot in time, a picture of a tank's condition at the time of the test.
Options For the Buyer Concerned About the Future:
Q: Isn't it likely that regulations will only get stricter and that all buried tanks will have to be removed?
A: No. The trend is going the other way. Recently the DEP relaxed the standards it uses to determine whether leaks need cleanup. Also, regulations that formerly covered some large home heating oil tanks have been totally eliminated.
Q: What if a client wants to change an existing tank now?
A: There are two prudent options:
- Replace the tank with a modern buried tank, made of cathodically protected steel (if properly maintained, manufacturers state it will last more than 200 years) or fiberglass, which usually carries a 30-year warranty.
- Replace it with an above-ground tank, typically in the basement. These tanks are normally smaller (275 gallons) and can be customized for hard-to-fit places.
Q: Will converting to another fuel get rid of the liability problem?
A: No. The tank would still have to be properly closed and the current owner would still be liable for cleanup costs. Besides, converting is the most expensive option, costing $1,500 to $2,500 more than replacing an existing tank. It also carries other disadvantages.
How Can Oil Companies Help a Realtor?—Just Ask!
Having a relationship with an oil company can be a help to a Realtor in many ways. The right dealer will:
- Offer training/information on systems and regulations, especially about tank issues;
- Help solve problems that could delay a closing;
- Service REO properties;
- Provide tips to help you list and sell oil-heated homes;
- Analyze oil bills and consumption history;
- Provide a statement of condition of the heating system and an analysis of its service history;
- Do a tank measurement;
- Transfer equipment and tank service agreements to the new owner at closing.
- And many dealers will clean and tune a system before the home is shown, often at little cost.
Reach out and work with oil dealers as partners. You'll be surprised at how accomodating they can be.
Call PFO at 1.800.253.9001 today!
