FHA - Underground oil tank with nearby well

[Patrick Starr]

Long time listener, first time caller...

My subject has an underground oil tank that is 20-30 feet away from the well. (drainfield is adequate distance away). I know there is a distance requirement for the drainfield/well, but can't find any information concerning the oil tank.

I have contacted the the health dept in that locality to see if they have restrictions.

While I wait, I was wondering if any of you had seen this situation and could offer any advice

 

[Judy Whitehead (Florida)]

Well, of course you were right - the health department is going to have to make a call on this.....but - remember, with the "new" FHA what you do is report what you know and see, including any report from the health department. Let the underwriter make the determination if it meets HUD standards or not or whether it has to be changed or moved. There are plenty of underground propane tanks around here, but never heard of an oil one. Most of the time those are above ground. I would find out if it meets building code or health dept. requirements and simply report it to the lender.

 

[AJL118]

Judy - Underground oil tanks may not be common in Florida but we had one in Winter Springs. The house was built in 1973. If you go pre-1980, you'll probably find all kinds of bones buried out there. And I'll bet that when these old oil burners were switched out, the tanks stayed buried and were never dug up.

 

[Richard Carlsen]

Report what you see. Make sure that you state that "The condition of the underground storage tank is not known. If condition is a concern to the client, they are advised to have it inspected by a qualified party." At that point it becomes someone else's problem.

That's all you have to do unless you determine that the proximity of the two effects value. In that case it falls back on you to figure it out. But there is no regulation about separation of a well and an underground fuel oil storage tank. remember that the tank was installed to hold fuel oil; not leak it.

 

[Kevin A. Spellman]

Here in MA the fire chief of the municipalities typically have a list of all underground storage tank (UST). I would call the authorities and ask for who issues permits for the installation of a UST and if a UST can be installed. Most transaction I see requires the removal of a UST and replacement of a new tank above ground. The property is at risk for any buyer or lender.

I all ways make a curable functional adjustment for the cost of removal and replacement. This is the typical market reaction in my service area.

I discovered a buried oil tank once in a purchase and the listing agent called the lender and asked for the mortgage be subject to removal, it was not disclosed in the listing. She got her way with the lender. The agent did this to cover her @$$ who first challenged me and said there was no UST. There was contamination and cost about $40,000 to remove the dirty dirt.