Buying & selling homes with buried oil tanks in New Jersey
If you are buying a house in New Jersey with a buried oil tank or selling a home with one, you will need to address the oil tank issue. The good news is that in New Jersey, the oil tank does not have to be an obstacle in any real estate transaction. This opinion may run counter to what you may have heard from your real estate agent or attorney. In reality, the NJ oil tank removal grants program makes it easy to buy or sell a home with a buried tank. Even if the state program is not an option, read below for some advice on how to handle the situation.
For NJ home sellers: Does having a buried oil tank severely impact my ability to sell my home?
It shouldn’t! Here’s why selling a home with an underground oil tank is easy.
- Underground tanks that are not in use: If the heating oil tank is no longer used to heat the home, your tank is considered out of service. This means you have another heating source (natural gas or propane) or an above ground oil tank that supplies fuel to heat the home. Buyers will be most concerned that oil tanks have been properly taken out of service. If you hired a licensed professional to take the tank out of service, chances are the tank has been properly closed. All you’ll need to supply the buyer with is paperwork which includes the town permits, the tank closure documents and the town approval or soil testing report showing that the tank did not leak at the time of the closure.
- Active underground tanks that are still being used: If the buried oil tank is still used to heat your home, a potential buyer will most likely want you to address the underground tank issue. Before the state launched their tank grant program, many homeowners waited until an offer was made on the property before proceeding with an oil tank removal project. This would inevitability place the seller in a weakened bargaining position as they tried to make concessions in an effort to calm worried buyers. If the buyer was still interested in the property and the seller agreed to remove the tank, this would often lead to delays at closing and unresolved questions about how to pay for the oil tank removal. Today sellers can avoid this entire situation.
- Don’t wait until you find a buyer. The NJ oil tank grant program makes selling your home with a buried oil tank much easier. Here’s how. If you know you are selling your home in the next 6 to 8 months, you should take advantage of the state program now and get the work done. The state’s tank replacement program enables homeowners to receive oil tank grant funding that pays for most, if not all, of the costs of removing and replacing their buried oil tank with a new above ground tank. Removing the tank and replacing it will make your home more marketable for sale and removes any questions about the property. If you are worried about the extensive paperwork and the confusion of dealing with the state to obtain the grant, there are companies that will manage the tank contractor’s removal process, fill out the extensive paperwork and guarantee you will receive grant funding! Even with the state help, the entire process can take some time to complete. This is why many listing agents recommend that their clients start the process early. The homeowner should hire a UHOT certified removal company which will be especially important if soil cleanup is necessary on the property.
- You will need a new tank which is usually placed above ground. Tank removal – effects on my property section will give you an idea as to what you can expect during the tank removal process. If you need help selecting an aboveground tank and need advice where to place it, visit our overview of the tank removal process.
- The grant program provides funding for leaking tanks. Many homeowners are worried about opening Pandora’s box if the tank is removed and contamination is discovered. If you qualify for the grant, funds are available to cover the costs for cleaning-up leaking tanks as well.
- What if the state program is not an option for the homeowner? First, the homeowner should purchase a tank protection (insurance) policy immediately, if there isn’t a valid one on the tank already. Local fuel oil dealers usually sell these policies to their clients. The policy will provide some financial protection if the tank leaks. Most of these policies are transferable, which means they can be assigned to the new homeowner at closing. Second, the seller can inform the buyer about the NJ tank program because the new homeowner will be eligible for the funding when they own the home. If the buyer is concerned about an oil tank leak, you can remind them that the state program has money available for cleanup as well.
For home buyers: Should I consider buying a home even though it has an underground oil tank?
Absolutely! The presence of a buried oil tank doesn’t mean it’s unsafe to buy the property. Here’s what the home buyer should do:
- The home buyer should find out if there is a buried tank on the property and determine whether the tank is actively in use heating the home. If the tank has been taken out of service, you should request all documents relating to the tank closure including town permits and contractor reports. These documents will prove the tank was closed properly according to state guidelines. Sometimes the seller isn’t sure if there is a tank on the property. If this is the case, there are companies that offer tank scanning services to locate buried tanks for home buyers.
- If a tank scan identifies an improperly abandoned tank on the property, the NJ tank grant program has funds available to pay for the removal of the tank.
- If the tank is active & in use, the buyer should insist that the seller apply for the NJ grant program which will pay for the removal and installation of a new tank. Many real estate agents & attorneys are unaware the program exists, which means you may have to inform them. Our tank program section discusses eligibility requirements and application process.
- Some sellers will refuse to apply for grant program. If this is the case, home purchasers should follow these steps to make sure they avoid unnecessary liability associated with the buried tank.
- Order a tank integrity test during the inspection period. There are various methods and companies available to perform the testing. Any testing company you hire should be licensed by the NJDEP. We recommend a comprehensive testing process that evaluates the tank and soil. If the soil has contamination that exceeds state limits or the tank fails the inspection, the homeowner must take measures to properly decommission the tank and clean-up the soil.
- If you qualify for the state grant program, apply for the state funds immediately after closing on the home. Make sure you the contractor you hire is NJDEP licenses and has a UHOT certification. Alternatively, you can hire a company to manage the entire removal process and guarantee your application will be approved for funding.
- We also recommend that you purchase a tank protection (insurance) policy, especially if you plan on waiting to remove the tank. These policies are available for purchase through your local heating oil dealer and will provide basic coverage in the event the tank starts leaking.