Selling a house with an oil tank is possible, but it often presents significant challenges that can complicate or delay the sale, particularly if the tank is unused.
Understanding the Impact of Oil Tanks on Home Sales
While a house with an active, well-maintained oil tank can be sold, the presence of an oil tank, especially one that is no longer in use, can be a major hurdle during a real estate transaction. Buyers, and more importantly, their mortgage lenders, often view oil tanks as potential liabilities due to environmental concerns and the high cost of remediation if a leak occurs.
Mortgage Lender Requirements
One of the most critical factors affecting the sale of a house with an oil tank is the stance of mortgage lenders. Most mortgage lenders are making the removal of an unused oil tank a condition of sale. This is true even if the tank has been disconnected for less than 24 months. Lenders want to mitigate their risk, and a dormant oil tank, whether underground or in a basement, represents an unknown environmental hazard. They may refuse to finance a property until the tank is professionally removed and, in some cases, a clean bill of health regarding soil contamination is provided.
Why Oil Tanks Are a Concern
The primary concerns associated with oil tanks include:
- Environmental Contamination: Leaks from old or corroded tanks can contaminate soil and groundwater, leading to costly clean-up operations.
- Liability: The current homeowner (seller) can be held liable for cleanup costs, even after the sale, if the contamination originated during their ownership. Buyers want to avoid inheriting this liability.
- Insurance Issues: Some insurance companies may be reluctant to insure properties with old or uninspected oil tanks.
- Buyer Apprehension: Many potential buyers are hesitant to purchase a home with an oil tank due to the perceived risks, maintenance, and potential future costs.
Steps to Facilitate a Sale with an Oil Tank
To make selling your home with an oil tank smoother, consider these steps:
- For Unused Tanks:
- Removal is Key: As a proactive measure, and to meet potential lender requirements, you should have your unused oil tank removed. This eliminates the liability concern for both the buyer and the lender.
- Proper Closure Documentation: If removal isn't feasible, ensure the tank has been properly decommissioned or abandoned in place according to local regulations. Obtain all necessary permits and documentation.
- Soil Testing: Consider having soil testing performed around the tank's location to demonstrate the absence of contamination.
- For Active Tanks:
- Inspection and Certification: Have the tank professionally inspected to ensure it is in good condition, up to code, and not leaking. Obtain a certification of its integrity.
- Insurance: Verify that the tank is covered by appropriate homeowner's insurance.
- Buyer Education: Be prepared to provide buyers with information about the tank's maintenance history, age, and any upgrades.
| Oil Tank Status | Impact on Sale | Recommended Action |
|---|---|---|
| Unused/Disconnected | Significant hurdle; lenders often require removal. | Remove the tank and obtain proper documentation. |
| Active/In Use | Less problematic, but still a concern for some buyers/lenders. | Ensure regular maintenance, inspection, and provide documentation. |
By addressing the oil tank issue proactively, especially by removing unused tanks, you can significantly improve the marketability of your home and streamline the sales process, avoiding delays or the collapse of a sale due to financing issues.
