New Jersey real estate buyers and sellers:
Welcome to the world of underground storage tanks. Homes that were originally heated by coal obtained deliveries via a chute into the basement where the coal could be shoveled into the furnace. Later, oil became the dominant home heating fuel, and would be pumped into an underground tank in the front of the property by a delivery truck.
Later, gas became the predominant heating fuel and would be piped into homes. Sometimes when the furnace was changed from oil to gas, the underground oil tank would be pumped out and filled with sand. Initially, the State of New Jersey accepted the sand filling as a proper tank closure, but later reversed itself and required the excavation and removal of all underground tanks.
The public concern was that the metal of the underground tanks deteriorated due to contact with ground water and ultimately, any remaining oil could find its way into the ground and contaminate the soil and groundwater. New Jersey adopted a stringent underground storage tank law many years ago aimed at the removal of underground tanks in general. In the case of a gas station, the owner was required to install double hulled tanks with a monitoring system to ensure that no gasoline would be released. However, there was no such safeguard with respect to residential properties.
Typically a home buyer should conduct a tank sweep as a part of the home inspection process to see if there is any metal underground that might be a tank. If the sweep shows metal, then the home seller would typically retain a contractor, obtain a municipal permit and excavate and remove the tank. If there is no evidence of tank leakage, then the contractor would fill the excavation with clean fill and have the town close out the permit.
However, if there is evidence of oil leakage, then the NJ Department of Environmental Protection (NJDEP) guidelines would require the removal of the tank and all contaminated soil, replacement with clean fill and the testing of groundwater. If the groundwater is contaminated, then the homeowner could be required to pay to purify the groundwater using onsite installed equipment. When the water testing provides acceptable results via the purification process, then approval is issued pursuant to NJDEP guidelines.
Since no one can estimate the cost of a leaking tank remediation, it is key for a buyer to insist that the seller remediate prior to closing. The buyer does not want any liability for soil or groundwater contamination. In one transaction that I handled, the buyer refused a $5000 credit from the seller who then paid over $50,000 to remediate the tank. In another, an auction buyer did not conduct a tank sweep and had to pay $75,000 to remediate a leaking tank when discovered by his buyer’s inspector. It pays to be cautious.
We are experienced New Jersey real estate attorneys with an emphasis on underground tank issues. Call us for advice and guidance.
