Tuesday, January 3, 2012

Underground Oil Storage Tanks

The Real Estate Council of British Columbia's Professional Standards Manual says:

Underground or Above Ground Storage Tanks

All underground storage tanks (or above ground storage tanks over 2500 L) that supply oil burning equipment are regulated by the BC Fire Code. Unused or abandoned underground or above ground storage tanks should be properly decommissioned because they are a potential source of contamination of the soil and groundwater, may pose a fire and explosion hazard and may impact human health. The provision in the BC Fire Code for the decommissioning of an underground or above ground storage tank used for supplying oil burning equipment requires that the owner use good engineering practice when removing, abandoning in place, or temporarily taking out of service the underground or above ground storage tank.
Licensees who are involved with the sale of a property that contains, or is thought to contain, an underground or above ground storage tank should be aware that the presence of an underground or above ground storage tank is a significant concern and should also be aware of their duties with respect to disclosure in this regard. Licensees should familiarize themselves with the BC Ministry of the Environment Fact Sheet on Residential Heating Oil Storage Tanks.
Listing agents have a duty to familiarize themselves with the property that they have listed and, where they suspect an unused or abandoned underground or above ground storage tank may be present, to take necessary steps to determine if one exists. If a seller is aware of an unused or abandoned underground or above ground storage tank, that seller has an obligation to disclose this fact. An unused or abandoned underground storage tank is considered to be a material latent defect and, therefore, its presence must be disclosed in writing as required by section 5-13 of the Council Rules.
Similarly, if a buyer’s agent is aware that an unused or abandoned underground or above ground storage tank is present, he or she has a duty to disclose this fact to buyers and further advise that its presence is an environmental concern. A buyer’s agent should also recommend that buyers familiarize themselves with the requirements of the BC Fire Code and any restrictions that the local municipality may have concerning unused or abandoned underground or above ground storage tanks. This is particularly important in municipalities where underground or above ground storage tank removal enforcement is a priority. As each municipality has different requirements and provisions for enforcing the removal or abandonment of underground or above ground storage tanks, a prudent licensee should be aware of the local requirements (usually administered by the fire department).
Lending institutions and insurers may also have corporate policy regarding underground or above ground storage tanks.
When drafting contracts with respect to properties containing underground or above ground storage tanks, licensees should familiarize themselves with the information found in Safety, Health and Environmental Disclosure Clauses below.
Finally, a buyer’s agent should advise buyers to have the property inspected and to seek expert opinion on the matter, especially if the underground or above ground storage tank is thought to be leaking.

The referenced links are worth a close read.

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In another forum, namely the BC Real Estate Council's Mandatory course, Real Estate E&O Insurance Legal Update 2011, the first topic is Oil Storage Tanks.

Some good stuff here, but some specific Contract Clauses are offered, also a process called Site Profiling which is not usual in Residential property situations, but offers a way for any Seller or Buyer to have a site professionally checked as required.


The Real Estate E&O Insurance Legal Update 2011, offers the following.  That even if the law does not require a site profile in the circumstances, the Council suggest that a seller complete and deliver a site profile to the buyer as a form of disclosure.  Where the parties negotiate the need for a site profile the Real Estate Council of BC suggest the following clauses:

Seller's Site Profile Clause
The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property by ________________date_______.
The Seller warrants that the information contained therein is true and correct to the best of the Seller's knowledge.

Buyer's Site Profile Clause
Subject to the Buyer reviewing and approving the site profile by ________________date______.
This condition is for the sole benefit of the Buyer.


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From an INSURANCE perspective:

I am advised that they will unquestioningly accept the FD Inspection Certificate and insure a property.  BUT, the BIG caveat, IF contamination is subsequently found NO insurance company offers coverage.  YOU ARE ON YOUR OWN.

Thanks, eh?

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A buried and decommissioned oil storage can be grouped as a Disclosed Material Latent Defect, but most people figure that since it is decommissioned it is no longer a Latent Defect.  The Standard Clauses in Webforms has a clause for Disclosed Material Latent Defects.

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A question I have on my mind:

IF a tank was decommissioned under a local Fire Department permit, and therefore inspected by the FD personnel, AND subsequently the tank is removed and there is evidence of oil leakage and soil contamination upon removal, WHO is responsible for the costs of remediation?

Three parties appear in my sights: the land owner at the time of the decommissioning, and/or previous owners, the tank decommissioning contractor, the Municipality and its Fire Department.

The Fact Sheet linked above says consult a lawyer familiar with all of this.  $$$$$$$$$$$$$$.

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IN SUMMARY:

Something tells me the site profile is a way to go, and, after all, this is the most recent and focused advice from our Council in BC.

2 comments:

  1. Contents of this blog are good and appreciative.
    Oil Storage Tanks

    ReplyDelete
  2. That's true. It's a big risk to everyone's health and as well as to the environment. The underground storage tanks should better be decommissioned properly.

    ReplyDelete