Liability of Buried Oil Tanks

Buried Oil Tanks

              A hidden liability?

 

On a scale of good to bad, buying a house with an abandoned and leaking oil tank falls distinctly onto the bad side of the ledger. The good news: properties with tanks in this condition are rare. The bad news: they do exist and oil remediation clean-up work can be very expensive.

To give you some idea of potential clean-up costs; the Washington State based insurance program, The Pollution Liability Insurance Agency (PLIA) offers $60,000 of free insurance to anyone in the state who registers their active oil tank with the program.  That type of liability is not something you want to discover after you buy your new house, so here are a few helpful tips and things to look for to avoid an expensive mistake weather you are a homeowner or a homebuyer.

Active Oil Heat

If you are a homeowner and you have active oil heat (meaning your current heating system runs on oil), and you live in Washington State, make sure your tank is covered by the PLIA insurance. You can register your buried oil tank @ http://www.plia.wa.gov/heating/insurance.htm.

If you are a homebuyer and you are purchasing a property with active oil heat, you want to make sure that the current owner has registered the tank. If they have not, you should register the tank as soon as you take ownership of the property.

As a general rule, the longer the history of coverage the better; this allows less opportunity for the insurance program to claim a pre-existing condition if a claim is filed.

Inactive Oil Heat

A dramatic shift away from oil and towards natural gas as the fuel used to heat houses occurred over the last four decades. The reason for this shift is twofold:  oil is more expensive than natural gas and oil prices are volatile and subject to spikes.

Keep in mind that natural gas is a relatively new product. In the Seattle area, natural gas started to be piped to our homes in the 1960’s. Therefore, most homes that were built prior to the 1960’s likely had oil heat at one time, even if they now have natural gas.

You could put these homes into two categories, those with:

  1. A properly decommissioned buried oil tank. In my experience most oil tanks have been properly decommissioned. This is when a professional contractor empties the tank and either cleans and fills the tank or removes it.
  2. An abandoned oil tank. Beware of the property with active natural gas heat and an abandoned oil tank. Such a property would not be covered under the PLIA insurance program. If the heating system is now fueled by natural gas and if oil contamination is found on that site, the owner of the property could be liable for expensive cleanup work.

What to Look For Outside

Orca Home Inspection Services recommends thorough look at active gas meters and inactive signs of previous oil heat systems

Exterior Gas Meter

On the outside, I look for presence of BOTH a gas meter AND an oil tank fill valve and / or breather tube: see attached photos for what these look like. If the oil tank has been properly decommissioned the breather tube and fill valve will usually be cut off, so there will be no signs of an oil tank on the outside of the house. Presence of BOTH a gas meter and an oil tank outside indicate there may be an abandoned tank on the property.

If a breather tube is still visible Dylan Chalk recommends further examination on how oil heating system was dismantled

Oil tank breather tube

Ask for a decommissioning report on the buried oil tank

Exterior Oil Fill Valve

 

 

 

 

 

 

What to Look For Inside

Dylan Chalk says this is a warning sign that an oil tank could still be buried on the property.

Interior: Oil tank split lines

On the inside of the house, go to where the furnace is installed and look for small copper lines. They often come as a set and the copper tubes will usually be pinched on the ends. This tells you the house was once heated using oil and may have a buried oil tank.

This photo shows typical copper split lines inside a basement. This indicates the house was once heated using heating oil.

 

What to Do

If you are concerned that the property has an abandoned oil tank that has not been properly decommissioned, have the property evaluated by a contractor who specializes in oil tank location and decommissioning.

  • If you are buying a house like this, try to have the tank decommissioned by the seller prior to your taking ownership of the property; that way if problems arise in the decommissioning, you are not the owner of the property when it happens.

If you do not see evidence of a buried oil tank outside, but you find evidence inside, do not just assume the tank has been decommissioned.

  • Ask the seller for a copy of a decommissioning statement. I would add this to the title of the property so if you lose the statement, there is a permanent record of the decommissioning. When you go to sell the house, you want to have this statement to pass along to the new owners.

Please note: these guidelines and principals will vary regionally. This article is limited in scope and does not cover some of the more complicated scenarios that can arise with oil tanks such as soil testing. Be sure to seek the advice of local experts in your area when buying a house.

I hope this helps explain some commonly asked questions about oil tanks.  Remember: happy home buyers are informed home buyers.  Good luck house hunting!

 

Dylan Chalk is a home inspector and the owner of Seattle-based Orca Inspection Services LLC – www.orcainspect.com. He is also the founder of ScribeWare software offering innovative and simple report writing solutions. Follow his house-hunting tips from the field on Twitter @ https://twitter.com/dylanchalk1. Or see his blog @ http://getscribeware.com/blog

 

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Dylan Chalk

Dylan Chalk is the owner of Seattle-based Orca Inspection Services LLC – www.orcainspect.com. He is the founder of ScribeWare inspection report software offering innovative and simple report-writing solutions – www.getscribeware.com. He is also the author of The Confident House Hunter – a book to teach home buyers how to look at and understand houses: Cedar Fort Press Due out July 2016 – www.dylanchalk.com

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