Oil tank leak in crawl space. Where do we go from here?

July 18, 2012 10:14 AM

A month from selling our house, and we found out we have an oil tank leak we need to clean up before we leave. Costs could be up to $10,000. Anything we can do?

With our expanding family, we recently decided to sell our current house and buy a larger one, in a better school district. We spend a while getting our house "showing-ready", did a few repairs, a lot of cleaning and painting, etc. Put our house on the market, and it sold within a week! Yay!

The offer we chose was a cash offer, not quite as high as our asking price, but it was enough, and they wanted a decision quickly. They were concerned about an oil tank in our crawlspace, but we'd been assured by the previous owners that the tank had been abated and was not a problem. Neither the real estate agent nor our home inspector when we bought the house made a big deal out of it, so we didn't know it was a problem.

We naively believed that everything would be fine, and told the buyer that we didn't have paperwork to prove it had been abated, but that we'd get it inspected. And given that the buyer wanted a decision within 24 hours, we accepted their offer before we got the tank inspected.

The tank was inspected on Monday, and it was the worse case scenario. There was a leak. A bad one, and given North Carolina state law, we are going to have to clean it up before we move. We asked the inspector to estimate the costs, and he said it could be up to $10,000. Time-wise, it's do-able. The inspector said that they can have everything cleaned up by late-August when we'd planned on being out of the house.

But now we feel ripped off. We decided on this selling price based on thinking that we wouldn't have to deal with the tank. I also didn't realize that if we had it inspected, that we'd necessarily be the ones to have to clean it up. But state law says it can't pass owners without being cleaned up.

I feel like we've been rushed through this process. I felt like maybe if we put our house back on the market, we could maybe wait it out and get a better offer that would cover at least half the cost of the clean-up. But is there even a way for us to back out and break the contract? I know a buyer can, but can a seller? After we'd agreed, we did have another buyer approach our agent about making a competing offer.

I asked our agent about that, but never got a real clear answer about whether or not it was possible for us to back out at this point to try for more money, or if it was even a good idea. I think, if we waited it out more, likely get some more money on the house. But now we have the problem of the oil tank, and people may be more wary to buy a house with this problem, even if we do take care of it ourselves.

Anyways, is there any possible outcome here that's better than us just eating the full cost of the clean-up?

(For what it's worth, we are aware of a program with the state where we get partially reimbursed, but it's uncertain right now if we qualify.)

posted by Tooty McTootsalot to home & garden (21 answers total)

Did the previous owners tell you in writing that the tank had been decommissioned?
posted by monotreme at 10:25 AM on July 18, 2012

Did you sign a contract yet? When you signed the agreement(assuming you signed one), was it for the home as is? If you only signed a binder, you are agreeing on the sale price and everything else is still to be sorted out. If you have signed a contract, check to see what the contract says. IANARA in NC, but it could still be sorted out. Contact your lawyer (if you have signed a contract, you have a lawyer) if you have not signed a contract, you can do as you wish right now.
posted by Yellow at 10:27 AM on July 18, 2012 [1 favorite]

First, I would get a second opinion on the size of the leak and the cost of abatement. Second, I would talk to my RE agent about your options including, depending on the size of her commission, him/her eating some of the cost.
posted by JohnnyGunn at 10:28 AM on July 18, 2012 [3 favorites]

They said that the tank had been filled. And apparently, it had. It was just done poorly. And the leak may very well have happened before it was decommissioned.
posted by Tooty McTootsalot at 10:30 AM on July 18, 2012

First of all, you need some estimates from actual abatement companies so you know exactly how much you are looking at. (Don't just use the guy who did the first inspection.)

Secondly, your real estate agent might not tell you directly if you can get out of this sale (if that's what you decide is best), because the agent wants to make the sale happen to receive the commission ASAP. (Real estate agents do not have a fiduciary duty to their clients.) I'd find a real estate lawyer who can review the contracts and help you navigate this sale and your state's requirements regarding the oil tank.
posted by stowaway at 10:47 AM on July 18, 2012 [1 favorite]

Seconding on what stowaway is saying and adding that: As far as I know, in MA anyway, inspectors aren't legally allowed to give cost estimates on repairs and/or damages. You should get a qualified contractor or abatement company to give you a solid cost quote for the work.
posted by eatcake at 10:54 AM on July 18, 2012

To be clear, this was a guy from an abatement company who would be doing the work, not a typical home inspector. But yes, we should definitely get a second opinion.

And I was worried about this, we've been trusting our real estate agent, but you're right, she's in the business of making the money quickly, and isn't actually there to look out for us.
posted by Tooty McTootsalot at 10:59 AM on July 18, 2012

We decided on this selling price based on thinking that we wouldn't have to deal with the tank.

I want to suggest that you actually decided on this selling price because you thought it was the best price you were likely to get for it. The fact that it needs some additional work which you weren't aware of does not increase its value. If the agreed price was a good deal before, then it still is.

You may have been screwed by the previous owners, but you aren't in a position to pass that along. The only way I'd nix the deal is if the additional costs made it impractiacal for you to go ahead with it, for example if it meant that you could no longer put the appropriate down payment on your next place. Holding out for a better offer that you just recently judged was unlikely does not seem rational.
posted by jon1270 at 11:01 AM on July 18, 2012 [5 favorites]

yeah, we got screwed on a couple of things by our real estate agent just because they wanted their commission check that week and not a day later. Definitely don't rely on their advice alone.
posted by dawkins_7 at 11:02 AM on July 18, 2012

Call a lawyer and ask about breaking the contract?
posted by lockestockbarrel at 11:07 AM on July 18, 2012

There is usually something in the offer agreement about earnest money and/or adjustments after inspections.

Usually both the buyer and the seller put up earnest money that may be forfeit if they back out. For example, the buyer and the seller would each have put $3,000 in earnest money in an escrow account. If the seller backs out for certain reasons (including "changed our minds", the seller gives up that money. Similar rules apply to the buyer. You may be able to back out if you want to do so, though you may or may not lose your earnest money.

There is also usually a standard clause (at least in Oregon) that allows for some adjustments after inspection. You may be able to ask the buyer to cover a portion of the abatement costs-- though, of course, the buyer may not agree to do so.

Do you not have anything from the prior owners about the decommission work at all? Because it's possible that the company that did the faulty decommission work may be liable for a portion of the abatement cost.

Now that you know that this is a problem, you're going to have to disclose it to future buyers (in addition to being required to fix it before the property changes hands). For future purchases, this is something to keep an eye on-- be sure you have copies of any environmental work/abatement certifications, because that stuff can have long-term impacts.
posted by Kpele at 11:39 AM on July 18, 2012

jon1270, yes, that is what we are mostly thinking, but we were just wondering if there were any other recourse. But there is the fact that before, factored into the price we asked was the fact that there was an oil tank in the basement, whose state was uncertain, whereas now, we will be selling the house with everything taken care of.

The reason why we were thinking we could maybe get a better price if we waited longer is that after we signed the contract, we had two other potential buyers interested in submitting offers to us.

And Kpele, we are definitely taking care of this now that we know about it, and will definitely disclose it. The only statement I have in writing from the prior owners is something they wrote up stating that the tank had been abated. Nothing official from the company who did it. We contacted the previous owners, and they said that they didn't know the name of the company, and I think it happened even before they moved in.

Thanks all, you have definitely convinced us that we need to talk to a real estate lawyer, and not to trust our agent.
posted by Tooty McTootsalot at 11:45 AM on July 18, 2012

did the contract state that you would be paying for problems related to the tank? or even that you would get it inspected? you need to look at what exactly was included in your contract with the buyer. if there is no language stating that you would make repairs to the tank (or anything else), then i don't think you are liable for that and you can renogotiate from there. it's like negotiating who foots the bill for any other repair/issue.
posted by violetk at 12:12 PM on July 18, 2012

So sorry that you have to deal with this. We ran into a home inspection issue, also in North Carolina, and found out that there is basically nothing you can do. Here's my previous AskMe question.

We ended up taking our house off of the market to do repairs because we heard from multiple agents that having buyers would want to know why the house fell out of contract. That being said, our house fell out of contract for three different reasons three times so it might not be as big of a deal if you just break off the deal once. I'd also consider asking the buyers if they would split the cost of the repair with you. Have you already agreed to a final price and list of repairs?
posted by JuliaKM at 12:15 PM on July 18, 2012

But there is the fact that before, factored into the price we asked was the fact that there was an oil tank in the basement, whose state was uncertain, whereas now, we will be selling the house with everything taken care of.

Ehhh, I don't think this will win you much. The state of the oil tank may have been uncertain in *your* mind, but the buyer made the offer knowing that he could find out for sure before the deal went through. You were taking a chance, but the buyer wasn't. That aside, I can see it being worth getting out of the contract if you think you got pushed into accepting an expedient lowball price.

You said you planned to be out of the house by mid-August. Are you already under contract to buy another house? What happens to that deal if this one falls through and you don't find another buyer basically immediately? Even if you have enough cash to buy before selling, how much might you lose to mortgage interest, taxes and utilities on the house you're not living in? A higher price will also increase the agent's commission and other closing costs (transfer taxes?), which will come out of your pocket. Do you think you're likely to get an offer that's enough higher to overwhelm those losses?

Are there local reasons that the market might soften at the end of summer, e.g. you live in a college town?
posted by jon1270 at 1:01 PM on July 18, 2012

Oil tanks on property are bad. If I were you I would keep this deal and do what you have to do. Otherwise you are still going to have to do the work, pay the 10 thousand and no guarantee you'd find another buyer or get more money for your property. When my husband was a realtor he steered people away from homes with tanks for precisely this reason.

Will you be removing the tank entirely for the ten thousand? That is the only scenario that makes sense to me re pulling the home off the market.
posted by St. Alia of the Bunnies at 1:31 PM on July 18, 2012

Based upon your contract, you're not obligated to spend dime one on abating the oil tank. Unless you are.

If it was discovered in the inspection, it's up to the buyer to decide if it's a deal breaker. He/she may decide to try to get you to pay for it, but you don't have to agree. You can negotiate it, or make it a take-it-or-leave it proposition.

The deal may fall apart, but you can stand firm on the purchase price by saying you agreed to that price on an as/is basis and that you will contribute Zero dollars towards dealing with the tank.

As St. Alia of the Bunnies says, you have no guarantee that you'll find another buyer for a long time, or that this won't be the best offer that you get.

That's always a crap shoot.
posted by Ruthless Bunny at 1:34 PM on July 18, 2012

I feel the same as Ruthless Bunny on these facts. It's not you who are breaking the deal to get more money or to delay the repair, it's the fact that one of the basic premises of the contract (that the tank is OK) has been discovered to be untrue. Both parties misunderstood the situation.

Please take this to your real estate lawyer for expert local advice, and tell them I sent you.
posted by JimN2TAW at 2:14 PM on July 18, 2012 [1 favorite]

Yeah, first step is talking to your real estate lawyer. Start there. (I work with this kind of thing professionally, although I am not your environmental consultant, etc.)

A few other thoughts:

1) Have you contacted your insurance carrier? Are you 100% positive your homeowner's policy doesn't have coverage that might apply? (It probably doesn't, but it's not totally unheard of. Definitely worth checking if you haven't already.)

2) If you want more info about how and when the tank was "abated" (and for the record, any tank closure that consists only of filling it with concrete shouldn't count), your local Fire Department may have records that could give you more info.

3) Definitely, definitely, definitely get at least two more quotes. There is a HUGE variability between different companies in the environmental field. If at all possible, you want them to do it as a "lump sum" job, meaning they will only charge you a set amount, or a "time and materials not to exceed", which will give them an upper bounds. Be wary about anyone who charges on a "time and materials" basis and has a much cheaper bid than everyone else -- they are likely to hit you with massive change orders. If at all possible, get references for the company you choose, and check them.
posted by pie ninja at 3:21 PM on July 18, 2012

Rule of thumb: Do not make major decisions in a time crunch.

TINLA. Seek legal advice soon. And ask for more time, and explain why. The buyer does not want a leaking tank any more than you do.

The mutual mistake escape hatch may well save you. You cannot deliver what the buyer expects at the agreed time, due to this unexpected development. If you can get the buyer to extend closing for a month, you will have time to deal with it.

But ultimately, it is the seller who has to take care of this stuff. You probably will have to pay the cost, if insurance doesn't (and there are lots of exclusions, so it might not). Your later recourse, if any, against the person who sold to you will be the next step.
posted by yclipse at 4:53 PM on July 18, 2012

I'm going to be the one to say "consider yourselves lucky". When my mom passed away, we had a buyer right away - one of the neighbors. All of us knew about the underground oil tank. We offered to split the cost of removing it. He refused, but kept with his offer. Yes, it stunk. Yes, the whole process slowed down to the speed to treacle as we had to have the state of New Jersey involved. Yes, it ended up being the worst case (contaminated soil). And yes, it galled us even further because we knew that the buyer was going to raze the property and didn't actually care about it other than being able to say "no contamination when purchased".
posted by plinth at 3:13 AM on July 19, 2012