Underground Oil Tank Liabilities

Dated: January 15 2020

Views: 785

Uncovering the Liabilities of an Underground Oil Tank

by W. ERIC SCHULT   (Contact Eric for Home Inspection Pricing and questions.  910-876-7770)  https://www.facebook.com/ozhomeinspections/

(The author is a licensed home inspector in North Carolina and owner of Oz Home Inspections, LLC, based in the greater Fort Bragg region and extending throughout NC’s south central sandhills.)

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The listing agent seemed to think it was much ado about nothing. The underground oil tank had “been there for a long time,” was not being used, and had presented “no issues” for the sellers for as long as they had owned the home.

UNDERGROUND OIL TANK – The fill and vent pipes protrude from the ground in the back yard of a Fayetteville home. Subsequent soil samples showed evidence of significant leakage.

Indeed, use of the underground storage tank (UST) had, in all likelihood, been discontinued in 1996 when a previous owner of the 1973 home had replaced the original oil-burning furnace with an electric heat pump, still in use. It wouldn’t be unreasonable for a subsequent owner to have no knowledge of a legacy tank. Or, the owner might have known about it, but been unaware or unconcerned it represented any liabilities for him or a subsequent buyer. In any event, he made no disclosure about it when putting his home on the market.

As it happened, however, the buried tank became a sticking point for my client, a prospective homebuyer who had engaged me to perform a home inspection that revealed the existence of the tank and recommended it be tested for potential leaks and any resulting soil contamination. Despite the listing agent’s optimism that sampling would “come back clean,” the environmental contractor’s report wound up justifying my client’s concern: A soil boring taken from the vicinity of the tank “exhibited a strong petroleum odor, suggesting [that] significant leakage from the [tank] has occurred,” according to the report.

A deficiency of this sort is not something one wants to find out about after taking possession of a property. So, it’s fortunate for the buyer in this case that the tank came to his attention before his due diligence period had lapsed.

It might not have been that way. For one thing, home inspectors in North Carolina are not required to inspect “for the presence or condition of buried fuel storage tanks.” A home inspection is a limited, non-invasive examination of the condition of a home. It’s restricted to that which is visible and readily accessible. Since an underground oil tank is … well … underground, it falls outside the scope of a home inspection by NC General Statutes and Administrative Code.

But between the lines there, somewhere, is an implied obligation for any good home inspector to interpret what evidence is observed, and provide their clients with potentially important insights about those observations.

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  • When I’m inspecting a home built in the 1950’s to 1970’s or earlier, for example, I know I’ll often encounter a central chimney protruding through the roof that doesn’t appear to serve as a vent for an existing fireplace. It’s a good bet that that chimney is an exhaust vent for a fossil fuel-burning furnace that may or may not still be in use, may or may not still be present, and may or may not be connected to, or associated with, an existing underground oil tank;

  • Up in the attic in a home of that vintage, I might otherwise encounter a chimney chase that has been lopped off below the roof sheathing so that it no longer protrudes through the roof. That’s likely an abandoned vent for a furnace no longer being used, and possibly also no longer present or installed. Again, that doesn’t, by itself, confirm anything about the existence of a buried oil tank, but it serves as possible evidence of one that may or may not still exist and may or may not have been properly abandoned or removed;

  • In the crawlspace, there might be an abandoned oil furnace, vent ducting, or/and other legacy components that couldn’t readily be removed through the crawlspace hatch. There might be just the base of a chimney chase remaining, with an exhaust inlet to its flue. These may also be present in a basement, if any, or a utility room/closet interior to the home;

  • Any of these observations would prompt me to conduct a visual search of the side and back yards for the presence of a pair of pipes (a fill pipe and a vent pipe) protruding from the ground (see photo). The visibility of these may be obstructed by overgrowth; and/or the pipe outlets may have been hacked off at ground level. It’s the existence of these pipes, as observed by the inspector or other party, that confirms the presence of an underground tank. However, this discovery still allows no conclusion about whether the tank might have been properly abandoned or whether any leaks have developed or soil contamination has occurred.

The confirmed presence of a buried oil tank, in my mind, is justification enough to recommend evaluation by a qualified environmental consultant/contractor to test for potential leaks and any resulting soil contamination. This is especially true if the tank is no longer used and is beyond its projected life expectancy (approximately 20 years). Any installation, service, or warrantee documentation the homeowner/seller may be able to provide, however, may help alleviate concerns about potential liabilities and expenses being assumed by the prospective buyer.

A qualified contractor can provide services including tank detection, soil testing, proper tank abandonment or removal, and remediation of any soil contamination. Tank and soil testing may cost a few hundred dollars, while tank removal and soil remediation may cost several thousand dollars or more, depending on the scope of the contamination. The state of NC provides additional information about this subject at: https://files.nc.gov/ncdeq/Waste%20Management/DWM/UST/Brochures-FAQs/FAQ-Home%20Heating%20UST.pdf.

An important takeaway from that document is that home heating oil tanks are non-regulated. There may be no public record of their installation, abandonment, or removal, and no documentation of regular servicing or leak detection monitoring. There very well may be, however, liabilities assumed in purchasing a property with a tank that has been leaking or subsequently develops a leak, even if the homeowner never used the tank and didn’t know it was there. It’s buyer beware!

A licensed home inspector may be your last line of defense in detecting this, or other, potential liabilities. Ask your real estate agent to recommend the most thorough inspector they know. While they might provide you with a short list to choose from, they are allowed to make recommendations between them if those recommendations are faithfully offered in the best interests of their clients.


(The author is a licensed home inspector in North Carolina and owner of Oz Home Inspections, LLC, based in the greater Fort Bragg region and extending throughout NC’s south central sandhills. Eric “Oz” Schult can be reached at 910-876-7770 or oz@ozhomeinspections.com.)

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