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Buying a House with an Abandoned Oil Tank

can fuel tanks rust

So you’re buying a house with an abandoned oil tank. You just put an offer on a house and you already have a contract. So what does that mean for you? Well maybe not much BUT probably A LOT! 

Things to Know About Abandoned Oil Tanks

Closure Packet

The first question is, do they have a closure packet (for when the tank was legally filled from the licensed tank removal contractor)? This would include:

  • pictures of the entire process
  • a write up of what was done for the tank abandonment
  • and MOST IMPORTANTLY a soil sample analysis results from a laboratory showing the soil is clean and NOT contaminated

If they do not have any of this paperwork, can’t find it, or don’t remember, then do NOT believe them. You WANT the soil sample results showing the soil is clean. Most likely, if they do not have any of the documentation, the tank abandonment was performed ILLEGALLY, (or not at all). The tank is most likely still in the ground with oil and sludge in it. It may or may not have a little bit of sand or gravel dumped in it. 

Using Unlicensed Contractors

They may have a receipt/invoice from a plumbing company or HVAC company showing something like “Fill tank in-place” = Total $xx00.00. That paper is not worth anything to you. That proves nothing and the tank should/needs removed now. Most plumbing and HVAC companies are NOT licensed by the Maryland Department of the Environment (MDE) for tank removal/abandonments in-place.

Or, if the seller has a letter from a so-called “Environmental Consultant” stating, “On this date… XYZ was done…” but that is all they have, that is also worthless. All buried heating oil, waste oil, gasoline and diesel fuel tanks in Maryland must be removed or properly abandoned by a Licensed Contractor. Licensing by the MDE, ensures they are a legal, certified technician.

Oil Tank Removal vs. Abandonment

Despite what other companies may say, it is always, always better AND cheaper to remove the tank INSTEAD of filling it in-place. WHY? Because the only way to be 100% certain the tank is not leaking is to pull it up and inspect it. We check for holes and check all the soil below the tank fro contamination. It is also faster, and better for everyone involved to have the tank out of the ground and no one has to worry about it anymore. GreenTRAX has the process down to a science; when we arrive, things run like a well-oiled machine, then if the tank is clean we can be done in a couple hours.

buried oil tank

Next Steps

Now back to your problem… The seller has no documentation of the tank job. So what happens now? Well, you, the realtor, or the seller need to call GreenTRAX, Inc. Most likely the tank will need to be removed (if possible) and soil tested. You’ll probably want it done before settlement. We still see certain mortgage companies, banks, lenders, home insurance companies, and other parties can & DO prevent BUYERS from going to settlement if the property has an old underground tank… regardless of if the tank is in use or not.

If a home in Maryland has a buried tank, unless the seller has proof that it was installed AFTER the year 2000, the tank is WAY older than 20 years. In many cases the tank is as old as the house. Your oil tank becomes more susceptible to leaking at any time after 20 years. After all, it is just bare steel buried in the ground, so it has been rusting for decades. 

But GreenTRAX, Should I Test My Tank or Soil First? You Know, To Save Money?

Please do NOT think about wasting money on a tank test or soil test. It is NOT worth the time or money to do this on a tank that is well over 20 years old. You are better off negotiating with the seller for them to do it prior to settlement. OR negotiate a credit back on the house so you can do it shortly after you move in. If the tank is still in use, you will need a new aboveground tank installed either outside or in the basement/garage.

Consider/negotiate money to also cover possible leak remediation. The cleanup costs DO NOT cost tens of thousands of dollars for residential properties. You do not have to demo the house, you do not have to dig up the entire yard. It is a relatively simple process to remove additional soil from below tank excavation in the same hole the tank was in. 

So How Much Will This Cost Me?

You can estimate for, ballparking’s sake, a couple thousand dollars +/- for the basic tank removal process. Then another couple thousand dollars +/- for a new aboveground tank install (if you will need one). Then if the tank has leaked it would be a safe estimate to guess between $4,000 – $10,000 of additional cost for the cleanup and remediation. So if you can get a nice round number of $10,000 credit back from the seller you should be covered, OR covered enough where you don’t have to come out of pocket for much more above that. But of course the ideal scenario, and what is customary, is for the seller to pay for all this work.

Plus if the tank leaked, you qualify for the MDE homeowner reimbursement fund, and you will get all your money back for the cost of tank removal and remediation costs less a $500 deductible. Call us for more questions on that program, we deal with them daily and we are the experts on this and know all the details. They do not cover the new tank install though. That is on you. 

Can Removing an Abandoned Oil Tank Cost More Than $10,000?

Yes of course. For very bad leaks it can, because it costs more to dig out and haul away more bad soils. Or if the oil has impacted the home/basement/sump pump, it will be more costly. Also, if the oil has impacted the drinking water well, or if the MDE inspector requires additional work onsite after we complete the initial excavation and backfill, it ill add up.

All of these things are possible although not common. BUT that is the best reason why we ALWAYS recommend the work be performed BEFORE settlement.

Will I Have to Move Back my Settlement Date?

You should allow at least 2 weeks before settlement. It can be done faster than 2 weeks, but we prefer more than 2 weeks. That way we can have plenty of time to figure out all of this stuff and get you all of the paperwork you need before going to settlement. It takes time to get soil sample testing results back from the lab and for us to put all the paperwork together for you. Everything can be expedited, but we prefer not to if we don’t have to.

The bottom line is if you have an underground tank or think you have a buried abandoned oil tank and you are the buyer, the seller, the buyers agent, the sellers agent or the home inspector, the bank’s rep, the home insurance company or other party involved in the real estate transaction call GreenTRAX, Inc. 410-439-1085. We are the buried oil tank experts in Maryland and have seen it all and done it all. Let our expertise help you as well. 

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More To Explore

The Maryland Department of the Environment is cancelling the reimbursement fund for homeowners with leaking heating oil tanks!

This cancellation takes effect June 30th, 2024. You need to have your buried oil tank removed NOW, so if the tank is leaking you can get reimbursed for remediation costs before the program goes away. Click here for more information on the reimbursement fund as it operates now.

We urge everyone to contact their representatives in Annapolis and the Governors office and tell them DO NOT cancel the homeowner reimbursement fund for leaking residential oil tanks! They can still renew this program before this year’s legislative session ends.

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