Oil Tanks (UST's)--Everything you wanted to know...

Although gas heat is a predominate source of heat throughout the state of Washington, oil heat is very common as well.   I've been selling Seattle Real Estate for several years now but until my most recent transaction I haven't had to deal with oil tanks (UST) very much other than having it decommissioned if it was no longer in use.   http://www.epa.gov/swerust1/   I thought it would be helpful to others to show some of the pitfalls to be aware of in your transactions if you list or sell a property that is heated by an oil furnace.

First of all, the CARDINAL RULE of oil furnace maintenance is to NEVER allow the oil tank to run dry.   As the oil tank nears empty, the flow of oil from the in-take line becomes uneven and starves the pump, causing it to work harder.   This puts extra strain on the pump and reduces it's effective life--so repeated incidents of allowing the tank to run dry can burn the pump out.   As the tank nears empty, sludge from the bottom of the tank enters the system, clogging the filter thus putting further strain on the pump.  Other elements of the furnace, such as the fan motor, can suffer the same fate and the costs to service the furnace mount as the technician attempts to trouble-shoot the problem.

Be careful of what you agree to in the purchase and sale agreement because it can result in unnecessary costs for the seller.   Asking the seller to "fill and have the oil tank inspected" sounds like a reasonable request at the time but it can end up being an unintended expense.   Inspection is a function not performed by the oil provider.   It's a separate service involving removal of all the oil in the tank, straining it, cleaning and pressure testing the tank for leaks, then placing the strained oil back in the tank.   When the oil company comes out to fill the tank, they normally "check" the tank for the presence of water before they pump.   So, in our deal, we simply agreed to "fill and have the oil tank checked" and the buyer was fine with that.

Never negotiate a clause for the seller to "obtain insurance" for oil tank leakage (if you're in Washington).   Insurance is provided by the State at no cost--all that needs to be done is for the owner to "register" their tank to be covered.   The next section covers this in more detail.

Liability Insurance

In 1988, in response to the possible widespread closure of petroleum USTs throughout Washington State, the Legislature made liability insurance available through a state administered reinsurance program.   Because homeowners are responsible for cleanup of contamination if a leak occurs and coverage is often not available from homeowners' insurance companies, reinsurance by the State would enable an insurance company to provide less coverage, therefore, lower premiums, while the UST owner would still have the required coverage.  Originally the reinsurance program was intended for rural communities with one or two gas stations, then in 1985, the Legislature made pollution liability coverage available for owners of active (in use) heating oil tanks.  (PLIA)  Pollution Liability Insurance Agency

The program provides up to $60,000 of insurance coverage for cleanup of contamination from active heating oil tanks that are registered in the program prior to the contamination occurring.  The program is funded by a fee that heating oil dealers pay per gallon of heating oil sold.  There is no cost to the homeowner for this coverage.  All that is required is that the owner fill out the required pdf form and send it in along with a copy of their most recent bill from their oil company.   Coverage does not run with the property--once the property changes hands the new owners must also register the same way.     

Oil Tank Decommissioning 

An oil tank that has been out of service for a period of one year, must be:

• Removed from the ground, or
• Permanently closed in place.

If an underground heating oil tank is closed in place all of the following requirements must be met:

• Flammable and combustible liquids, as well as sludge, must be removed from the tank and connected piping.
• The suction, inlet, gauge, vapor return and vapor lines must be disconnected.
• All remaining underground piping and openings must be capped or plugged.
• A record of the tank size, location and date of abandonment must be maintained.
• The tank must be filled with an approved, inert solid material. (there is an exception to this requirement--if the tank is below grade, the local Fire Cheif may allow the tank to simply be capped.) 

One final note:  the oil in the tank is considered personal property (perhaps this is not the case in other states) and the escrow officer should credit the value of the oil remaining in the tank to the seller.   Since the buyer will be using the heat it only makes sense that they should pay for it.

Well, I know this is dry stuff but it was tough on me too!   If you're a working agent, there's your primer for dealing with properties served by an oil furnace.