BURIED OIL TANKS

If you are listing or selling a property with an in-use underground storage tank, you have a legal and ethical duty to disclose the existence of the tank and any provincial or state requirements in terms of registration, and replacement or upgrading, to any potential buyer. 

Even above ground storage tanks must be inspected and, if needed, upgraded to ensure that leaks will not occur. Some insurance companies, will not provide property insurance unless the tank meets the highest standards. 

Before putting up for sale, it is suggested that you arrange an inspection completed on your above ground or underground tank prior to listing their home. This will help smooth transaction removing all liability for any future safety issues pertaining to environmental hazards or associated costs.

Questions asked to sellers:

a) Is there a fuel oil tank on the property? If yes, complete the following:
Underground. Date for required upgrading or removal..................................................
Aboveground. Age of tank........................... Date of last inspection...........................
(b) Does the fuel oil tank comply with the Technical Standards and Safety Authority
requirements and any other requirements for fuel to be delivered?

UNDERSTANDING OIL TANKS

Real estate transactions can be put at risk if a client purchases a property with an underground fuel oil tank and is denied homeowners insurance. If a client finds that an existing tank has not been registered, remedial action may cost them thousands of dollars.

Homebuyers have expressed concern over home insurance policies being denied or being unable to obtain home insurance as a result of underground storage tanks. A number of transactions have fallen through on closing as a result.

According to the Insurance Bureau of Canada, a home with an exterior oil tank older than 15 years, or an interior tank older than 25 years will not be insured.

The problem

The problem is that many oil tanks are corroding from the inside out, so the failure is not readily visible. This often occurs from condensation that builds up inside the tank. Since oil is lighter than water, the water goes to the bottom of the tank and causes corrosion. The first sign of a bad tank could be an odour of oil in the air. There might be rust or corrosion where the legs are welded to the tank. Other symptoms could include a leak in the fuel filter or the nozzle becoming plugged.

Insurance companies are concerned that an old oil tank can leak and spill hundreds of litres of heating oil into the home, or into the ground. Spilled oil can quickly contaminate soil and groundwater. If the leak finds its way into a sump pump or floor drain, the spill will undoubtedly make it a very expensive clean up. With outside storage tanks, where rust and corrosion are more common, a spill can contaminate the soil or make its way into the nearby streams or rivers.

What may seem like a simple clean-up can in fact be a complicated task to replace the leaking tank and supply lines, remove contaminated soil, replace the foundation and treat groundwater. The cost to repair a leaking oil tank can range from several hundred to several thousand dollars. The most commonly used tanks for heating oil are steel containers that hold about 1,000 litres and weigh close to 1,000 kg when full. Their odd shape, which lets them easily pass through doorways, also makes them unstable unless they are properly secured from tipping over.

When buying a tank, look for a label that tells the date and location the tank was made. The label should clearly indicate that it meets a national construction standard. The National Fire Code recommends that all piping and connections on oil tanks be made of metal, not plastic or rubber.

Buying a used oil tank is not recommended. Rust and sludge that has collected in the tank will cause burner problems.

Indoor tanks

Many home oil tanks are designed and built for indoor use. Indoor oil tanks will generally last longer and improve the efficiency of oil-fired appliances. Indoor storage tanks are less likely to spill and do not emit an odor.

When installing an indoor oil tank, place the tank where it can be easily inspected but will not be damaged by normal household activities. If possible, surround the tank with a low curb and dyke to contain any leaked oil. Never place a tank against a wall, as this can cause the tank to rust.

Cover the supply line and filter to protect them from damage. Storing objects on top of the tank could potentially lead to damage.

Outdoor tanks

Outdoor tanks should be placed at least 15 m from any well. To prevent rust, cover the tank's exterior with enamel paint. Support the tank properly to prevent it from shifting or falling over. Prepare a non-flammable base using concrete or patio stones. Wood is not recommended as it can burn, rot and retains water, which causes the tank to rust. Slope the tank slightly toward the drain.

Ensure the tank stays upright and does not make contact with a wall. To allow for changes in ground level, the oil burner supply line should have a horizontal loop before entering the building. The line should be sloped toward the building to prevent water collection.

If possible, the oil filter should be placed inside the home because collected water can freeze and cause splitting. The supply line can be installed through the top of the tank to protect against breaking the line and draining the tank.

If frost heaving or ground settling causes an tank to move, have it leveled properly.

Underground oil tanks

Many underground oil tanks have reached the end of their useful lives and are beginning to corrode, rust and leak. Increasing homeowner insurance claims resulting from leaking oil tanks are very expensive and can lead to high insurance rates, or even refusal of coverage. It is a homeowner’s legal responsibility to properly maintain the oil tank and clean up any spills or leaks that may occur. Leaking underground storage tanks may create several hazards including:

• Products and product vapours can generate a potentially explosive mixture;

• Products can enter surface water;

• Products can enter drinking water;

• Products can contaminate surrounding soil;

• Products can damage property.

Problems with underground oil tanks may complicate the process of applying for homeowner's insurance and, in extreme cases, may adversely affect real estate transactions themselves. How to check if an underground oil tank is leaking Because they are buried, it is difficult to detect a leaking tank. Some underground tanks may leak for years without owners realizing it. If oil consumption suddenly goes up the tank may have sprung a large leak.

There are companies that test underground tanks for leaks. Call the fuel supplier to help find underground tank testing companies.

What to do if an oil tank is leaking

Suspect a leak in an underground oil tank? Call a TSSA registered fuel oil contractor to help find and stop the leak and clean up any leaked fuel oil. In Ontario, homeowners are also required to call the Spills Action Centre of the Ministry of Environment at 1-800-268-6060. Insurance companies may also have resources of information.

Underground tanks are required to be upgraded with specific leak and spill prevention equipment or be removed.

What to do with unused underground oil tanks

An unused underground oil tank must be removed and all contaminated soil must be cleaned. Underground tanks are required to be removed by TSSA registered fuel oil contractors. When an underground tank is removed, the soil around the tank must be assessed for contamination and all contamination cleaned.

Tank maintenance

Spills can be avoided by detecting problems early on. If asked, most fuel companies will inspect the tank yearly, and will report any problems or recommend repairs. At least once a year, change the filter and remove any sludge and water from the tank. Check with a fuel company about oil additives to reduce the water in the tank. Occasionally, check the outside of the tank for any rust. Clean off any spots and apply a rustproof paint.

When replacing an oil tank, be careful not to transfer all of the contents of the old tank into the new one. Accumulated water, sludge and bacteria will cause the new tank to corrode and leak. Keep the tank relatively full over the summer so that less water from condensation will collect inside. Oil tanks should be checked for problems after each fuel delivery.

What consumers should do when buying or selling a home with an oil tank

Prior to closing, contact the fuel oil supplier for the home and determine if the basic or comprehensive inspections of the tank and oil-heating appliance have been completed. The fuel oil supplier will have information about the servicing and inspection program that is in place for the home.

Selling a home with an oil tank? REALTORS should expect questions regarding the age of the tank, location and proof that the tank installation meets safety requirements. Purchasers should expect to be asked, by their insurer, to provide this type of information when applying for insurance.

Technical Standards and Safety Authority (TSSA)

If You Own an Underground Oil Tank:
  New regulations require all underground tanks to be registered with the Technical Standards and Safety Authority (TSSA) by May 1, 2002 or fuel oil will not be delivered to the tank.
  Old, underground tanks are very likely to leak.
  Oil leaking from underground tanks will contaminate soil and groundwater and result in expensive

environmental clean-up costs!
  Underground tanks are required to be upgraded with specific leak and spill prevention equipment or removed.

   Upgrading requirements for underground tanks depend on the age of the tank (see table below).from corrosion are required to be removed by October 1, 2006.

  Underground tanks with a storage capacity greater than 5 000 litres will need to be leak tested annually.
  Unused underground tanks are required to be removed and any contamination cleaned.  The new Code which applies as of October 1, 2001, contains the following stipulations: 

Upgrading includes installation of a spill-containment system, corrosion protection and an overfill protection devide.  Failure to comply will lead to penalties and orders in accordance with the Code.  Furthermore, the law requires that ll underground tanks be registered with Technical Standards and Safety Authority (TSSA).  The registration is free.  The TSSA issues a registration number.  If the tank is not registered, the fuel company cannot deliver fuel.  Similar registration requirements exist in other jurisdictions. 

The Technical Standards and Safety Authority (TSSA) is an independent, not-for-profit organization responsible for the delivery of a range of safety services. This includes the administration of Ontario's Technical Standards & Safety Act, 2000 within various industry sectors and the delivery of safety programs to the public. For inquiries, please visit our website at www.tssa.org or contact Richard Lebel 416-325-2081, Theresa Coombes 416-325-1615 or our toll-free line 1-877-682-TSSA (8772).

You Asked ...

Q. What is an underground oil tank?
A. An underground oil tank is a container that is buried and contains fuel oil to be used in appliances, such as furnaces and boilers. Tanks that are in basements are not considered underground tanks.

Q. How can I tell if my underground tank is leaking?
A. Because they are buried, it is difficult to tell if the tank is leaking. Some underground tanks may leak for years with very without owners realizing it. If your oil consumption suddenly goes up your tank may have sprung a large leak! There are companies that test underground tanks for leaks. Call your fuel supplier to help you find underground tank testing companies.

Q. What do I do if my underground tank is leaking?
A. Call a TSSA registered fuel oil contractor to help you find and stop the leak and clean up any leaked fuel oil. You are also required to call the Spills Action Centre of the Ministry of Environment at 1-800 -268-6060. Your insurance company may also be able to assist you.

Q. Who are TSSA Registered Contractors?
A. By law, all contractors working on fuel oil equipment such as underground tanks are required to be registered with TSSA. Persons repairing, installing, removing and servicing fuel oil underground tanks are also required to be trained and certified as a "Petroleum Equipment Mechanic 2." Your fuel supplier may be able to refer you to some good TSSA registered fuel oil contractors.

Q. How do I register my underground tank?
A. By completing the Underground Fuel Oil Application Form and returning it to TSSA, your tank will become registered. A registration number will be assigned to your tank that you can give to your fuel distributor to ensure uninterrupted fuel supply.

Q. How do I remove my underground tank?
A. Underground tanks are required to be removed by TSSA registered fuel oil contractors. When you call a contractor, ask for the TSSA registration number. When an underground tank is removed, the soil around the tank must be assessed for contamination and all contamination cleaned.

Q. I have an underground tank that I am no longer using, what should I do?
A. Once an underground tank stops being used, or where it hasn't been used in two years the underground tank is required to be removed and all contaminated soil cleaned.

Q. Is there any government funds for homeowners upgrading or removing their underground tanks?
A. Currently, owners of underground tanks are responsible for the costs of maintaining, upgrading, and removing their underground tank and for cleaning up contamination. Some fuel suppliers may have special financing programs to help you in replacing the underground tank with an aboveground tank.

Ontario

Technical Standards and Safety Authority (TSSA)

4th Floor, West Tower

3300 Bloor Street West

Toronto, Ontario M8X 2X4

(416) 325-2000

Toll-Free (outside Toronto) 1-877-682-8772 (TSSA)

E-mail: contactus@tssa.org

http://www.tssa.org