Are you selling a house in New Jersey with an underground oil tank? Selling a home with an underground oil tank may feel easier than dealing with removal, but it may limit the pool of buyers and make attorney review challenging. Learn more about this in the video or transcript below!
This is Earl White, Real Estate Attorney. One common question I often get at least every few months is whether or not a seller can sell a house in New Jersey with an abandoned underground oil tank.
Sellers definitely can, and it does happen somewhat frequently where the seller can sell like that. And as long as it was abandoned properly usually that does not present any legal issues to sell with the tank there. The bigger question isn’t whether a seller can do it, it’s whether a seller should or is actually able to execute on the sale.
Now the reasons the seller would want to sell without removing the abandoned tank? You save some money, it’s $1000 or so. As long as it’s a 500 to 2000 gallon tank it’s not going to be a large sum of money, more than a few thousand dollars, just to have it removed.
But there could be, if for some reason when it’s removed, there’s some evidence of contamination, of past soil contamination, even if it wasn’t picked up before, that can then result in a case being filed with the New Jersey Department of Environmental Protection and require remediation. So if you do remove it there is that level of risk that contamination could be identified at that time, which then can get costly, much more than just the removal costs. So that’s one reason sellers might be hesitant to remove it prior to closing.
Also, it’s just obviously stressful to do it during a sale process or before a sale, so avoiding those headaches is something that’s attractive to sellers. So a seller can do it and there are advantages to saving some time and some money and some stress to sell with the tank in place.
However, I would say more often than not most sellers do end up removing it for a few different reasons.
First is that the buyer pool, and this is a good question to ask your realtor as well, the first is that the buyer pool is just very limited for buyers willing to buy a home, a house, that has an abandoned underground oil tank because the buyer doesn’t want to inherit some problem in the future. I could tell you from experience, deals, I’ve had clients that are selling with a properly abandoned tank, properly abandoned in the ground, all permits were obtained, but the deals repeatedly fall out of attorney review because once the buyer goes into attorney review, but then they talk to their buyer’s attorney and by the time they’ve considered everything they won’t proceed out of attorney review unless the seller agrees to remove the tank.
So even if you try to sell it, even silver sellers, even if you try to sell it with the tank in place, and even if you have a preliminary agreement, the deal goes to attorney review, once the full situation’s been explained from a legal perspective, a lot of times the buyers will get cold feet and you’ll just end up having to remove it anyway.
So also, and if you’re insisting on it, then who are the buyers that are going to be left? Developers, house flippers, people willing to take some more risk or handle something like that. And you’re going to take a financial hit on the sale price when you’re going to sell to a buyer that’s an investor, a house flipper, and that type of issue.
Also, and sometimes it might have to be cash right, because I have seen certain, not all lenders, but some lenders, some lenders are hesitant to make a loan on a property that has an abandoned oil ground tank, even if you have permits. So sometimes for certain loans we’ve gotten down the road and then it turns out that the loan either gets pulled or the lender begins to insist the tank has to be removed.
So those are other reasons that you may consider wanting to get this tank removed before the closing because you’ll just get more money, run into less headaches in the attorney review and during the sale process, have less problem with the lender, and you may also end up making more money on the sale in net because you’ll have more buyers bidding at a higher price if they don’t have to feel that they’re taking a risk or liability risk having to inherit the abandoned oil tank, which at some point in the future they may have to remove.
So that’s it for this one. If you need any help with any real estate sales or real estate transactions give us a call. (201) 389-8275.
This guide applies to buying a fix-and-flip or rehabilitated home in Newark, Jersey City, Hoboken, Paterson, Elizabeth, Union City, West New York, Bayonne, East Orange, West Orange, North Bergen, Clifton, Bloomfield, New Brunswick, Atlantic City, and across Bergen County, Essex County, Hudson Couny, Union County, Morris County, Somerset County, Atlantic County, Monmouth County, Middlesex County, Ocean County, and Passaic County.
Call us at 201-389-8275 or visit the Contact Us page for assistance with any real estate sales. Note: The information provided in this article is for informational purposes only and does not constitute legal advice. Readers should contact an attorney for advice on any particular legal matter.