How Do Underground Oil Tanks Impact Real Estate Transactions?

April 28, 2022

Portland is an amazing town with great food, plentiful outdoor activities, and excellent neighborhoods. It’s also a highly green and eco-friendly city, often pushing the envelope when it comes to sustainability. However, that hasn’t always been the case. Many homes in PDX have underground oil tanks that create a significant environmental impact.

Navigating home sales and purchases for old homes can be tricky, so it’s crucial to have an experienced real estate agent on your side. Everything from buried oil tanks to lead and asbestos concerns may be in play with older houses. 

Julia Monaghan Real Estate understands all the critical pieces in these transactions and knows how to protect your interests. Let’s connect and see how we can help you with your home sale or purchase.

Portland Wasn’t Always So Green

Today’s Portland homes use many different energy sources, such as natural gas, electricity, and solar power. But before these other options became widely available, many homes relied on heating oil. In fact, most homes built before the mid-1960s used oil. 

Heating oil is a petroleum product that shares a lot of similarities with diesel fuel. With that in mind, you can probably guess that it wasn’t an eco-friendly choice. 

Throughout much of the United States, the oil storage tanks sat in basements. In Portland, however, basements weren’t as common. The result was that older Portland homes frequently had buried oil tanks on the property. 

And even when a basement was available, many homeowners didn’t want to give up valuable space to a giant tank. Vandalism was also a concern that led people to bury their tanks instead. 

As with many decisions people have made throughout the centuries, burying the tanks had unforeseen consequences. Over time, the tanks often corrode and lose their structural integrity. As the tanks become compromised, oil can leak out, contaminating the surrounding soil and groundwater.

Underground Oil Tanks Abound

According to Oregon’s Department of Environmental Quality, there are almost 30,000 decommissioned underground oil tanks in the state. The majority of those are in the Portland metro area. Decommissioned means that these tanks are no longer in use and have undergone the necessary protocols to ensure they don’t leak oil into the ground.

The decommissioning process usually requires experts who specialize in this. It includes emptying and cleaning the tank before filling it with concrete or sand. 

They will also cut off the fill and vent pipes and take soil samples from around the tank to determine contamination levels. When everything is complete, the decommissioning company will register the tank with DEQ if required. 

Technically, homeowners or contractors can do this, but a licensed inspector must certify that it is done correctly for DEQ. It’s generally best to let a specialized team do the work.

In some cases, the tank has to come out of the ground entirely. And depending on soil samples, the surrounding earth may need to be dug up as well.

Portland still has thousands of homes with oil tanks that have not been decommissioned and even some still in use. If you’re considering buying an older house, it’s important to do some investigating because dealing with underground oil tanks properly can get expensive. Like tens of thousands of dollars expensive.  

What To Know as the Seller

Underground oil tanks are a significant concern when it comes to real estate. We all want to be good citizens and take care of potential hazards, but sellers also want to sell!

Here are some of the key things to understand about selling a home that has or may have a buried oil tank:

  • If the home has an oil tank still in use and no leakage, you don’t need to do anything.
  • If you know there is an abandoned underground oil tank or any contaminated soil, you must disclose it to potential buyers.
  • You are not required to determine if there is a tank if you don’t already know.

If you’re not sure about the existence of an underground storage tank (UST), there may be hints on the property. Pipes coming up from the ground, usually within ten feet of the house, are a good indication a tank is present. 

However, the absence of pipes doesn’t mean there isn’t a buried tank. Often, homeowners cut off the pipes without decommissioning the tanks, so then a metal detector may be necessary.

Here in Oregon, you can also search the DEQ’s database of decommissioned tanks. If your property address is on the list of clean sites, you can breathe a little easier because it means the state has a record of decommissioning without contamination.

As the seller, it’s important to know that a buyer may want to determine if an oil tank is present. If they do, work with your agent to decide how to proceed. As the property’s current owner, you are responsible for cleanup if an inspection reveals contaminated soil. This is true even if the leakage occurred before you bought the home.

You can refuse to allow the buyer to do a search, but any potential buyer will likely make the same request. If you do allow the search, the buyer is responsible for paying for it unless you come to a different agreement.

What To Know as the Buyer

Underground oil tanks are a big deal. Handling their decommissioning and any necessary soil cleanup can cost up to $100,000. As the buyer, it’s crucial that you do the following:

  • When writing the offer, be sure your agent covers your bases about a potential underground tank. You want to have a legal out that protects your earnest money if it turns out there is a tank.
  • If the seller discloses that a tank exists or did exist, ask to see the DEQ report showing the decommissioning and soil samples.
  • If the seller tells you that the tank is empty, that is not sufficient. Emptying a tank is not the same as decommissioning it, so you need to ensure there is DEQ documentation.
  • If the seller doesn’t know whether there is an underground oil tank, hire a qualified professional to investigate.
  • If there is a tank with no decommissioning, talk with your real estate agent about the next steps. 

It’s critical that you get all the information possible in this situation, and hiring someone to determine if a tank exists is well worth the cost. If they find an underground tank, you can ask the seller to have it decommissioned and to show proof of clean soil samples. 

They may balk at this, but they now know it exists and will have to disclose it. They almost certainly will have to take care of it before selling.

Why? Most lenders will not loan on a home with an oil tank unless it is removed or decommissioned and there are clear soil samples. And even in a cash deal, buyers are wary. If they choose to purchase, knowing there is a tank that hasn’t been decommissioned, they will become liable for future cleanup costs no matter how high those costs climb.

Expert Representation Is Essential

Whether you’re buying or selling, underground oil tanks are serious business in real estate transactions. To protect your interests and your money, it’s critical to have an expert agent on your side.

Julia Monaghan Real Estate is here to help you navigate the ins and outs of this transaction. We have years of experience with older Portland homes and know how to proceed in these situations. Reach out today to see how we can help make your next sale or purchase as smooth as possible.


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