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Heating Oil Tanks – New Laws and its effects on Real Estate

To all NC Real Estate Agents;

 
As of October 1, 2015, North Carolina Laws pertaining to Non-Commercial Home Heating Oil Tanks have changed and the Non-Commercial LPUST Cleanup Funds (aka Trust Fund) have been eliminated.

 
It is no longer necessary in many cases to remove petroleum contaminated soil and groundwater from a property to achieve a Notice of No Further Action (NFA); however, in order to achieve an NFA status for these incidents without cleanup, land use restrictions will be placed on the deed of the property. Cohesion Flow Chart

 
In order to avoid land use restrictions, cleanup of all impacted soil and groundwater to below applicable standards will be necessary to achieve an NFA status for a previously impacted property. There is no longer a petroleum cleanup fund to help reimburse cleanup costs.

 
We cannot predict if these regulations will be reversed in the future or not; however, the state legislature has the authority to reintroduce cleanup requirements, and the state has the authority to reverse any Notices of No Further Actions previously or currently issued.

 
Therefore, as a buyer and a buyer’s agent, be extremely careful when buying an older home. It has now become even more important to make sure the property you want to buy does not have an unresolved leaking tank issue on premises. Even if you can buy a property with such an issue, the question remains if you can sell the property one day. It has become a situation of playing hot potato.

 
Buyers who are interested in adding or rebuilding on a property should realize that all soil impact will likely have to be removed from the area underneath the proposed building area, unless you are willing to take some risks with potential vapor infiltration, land use restriction, disclosure, insurance, and financing issues.

 
Sellers must continue to make sure the presence of current and former tanks is being disclosed when selling their property. Removing evidence like cutting off tank pipes or removing a tank without disclosing the fact that a tank exists or existed on the property is not only a likely violation of disclosure laws but also considered a deliberate attempt to hide a material fact.

 
If you have any questions concerning properties with tanks, new laws and cleanup of leaking tanks, please feel free to contact us at 919-233-8626 or at cboshoff@cohesion-inc.com, or visit us at cohesion-inc.com.

 
Sincerely,
Christoph Boshoff
Cohesion, Inc.

January 2012, Newsletter

To all our Real Estate Agent friends;

If you are active in real estate, you will potentially run into a heating oil tank situation.  A large percentage of older homes were at one time heated with fuel oil.  Heating oil tanks bring many questions and uncertainties, which can deter buyers from purchasing a property.  However, proper education will enable buyers to better understand the potential liabilities and how they can be safely addressed.  Hiding or downplaying the potential liabilities of tanks will only increase your potential liabilities as an agent.

Let Cohesion, Inc. help you educate your clients of these potential liabilities and how to minimize these liabilities without having to look for another property.  An informed client is a happy client; they can make decisions that best suit them.

When buyers realize it is much better buying a home with a disclosed heating oil tank than buying a home with no disclosure or limited information of its past heating sources, they are more willing to follow through with purchasing a property of their choice, particularly if the tank is removed and cleaned by a licensed professional.  It is a legal requirement for leaking tanks to be reported to the State and cleaned up under the supervision of a licensed Geologist or Engineer; and it is highly recommended that all tank removals and inspections to be conducted by or under the supervision of a licensed Geologist or Engineer.  Recommending these services to be conducted by any other person or entity is potentially negligent.

And remember, removing a tank or filling a tank in place without knowing if the tank leaked will not free an owner and possibly their agent of the liabilities associated with heating oil tanks.  While the law requires disclosure of any knowledge of past or present heating oil tanks, not all owners and representatives are aware of the law and might forgo disclosure of past or present tanks.  Buyers and representatives must be diligent in their approach; if you are buying a house built in the 1980’s or older, be aware.  There is a greater potential of the property having a tank (past or present) than not.  Ask the owners specific questions in writing regarding potential heating oil tanks; and request all answers in writing.  Attached is a Heating Oil Tank Inquiry Form you may request for the owner to complete or you may opt to ask these questions yourself.  By law the owner is obligated to disclose any material facts; and declining to answer specific questions pertaining to material facts while knowing the answer, could be seen as willfully withholding knowledge of material facts.  Having these questions answered will act to protect you and your client.

Note, not all sellers have full knowledge of properties being sold and might not be able to accurately identify the existence of heating oil tanks; and additional due diligence may be necessary by a buyer beyond the completion of the Heating Oil Tank Inquiry Form.  Feel free to call us if you need additional guidance or visit our website at Cohesion-inc.com.  Do not forget that we are still running our tank removal special of $600 for the Triangle area.

We wish you a prosperous 2012.

Thanks,

Christoph Boshoff
Cohesion, Inc.
919-233-8626
cboshoff@cohesion-inc.com

 

September, 2011 Newsletter to agents

To all agents representing buyers;

Cohesion, Inc. has helped real estate agents and their clients to deal with home heating oil tank issues since 1998. We are committed to continue improving our services to you, and yours to your clients. We have upgraded our website at cohesion-inc.com/residential. Please take a chance to look at the website and feel free to give us feedback on how we can improve it or how much you can benefit from it.

An important addition to the website you can greatly benefit from is the Acknowledgement of Liabilities form we have added for you to use. The form is attached and can also be viewed on our website at cohesion-inc.com/residential.

This form will minimize your future liabilities when your clients are looking to buy an older home. As you know, many older homes used heating oil, and oil tanks could have been or could still be present on premises. Proper inspection of these tanks is highly recommended before purchasing a property, and you should make sure buyers are aware of the liabilities associated with leaking tanks. Completion and signing of the form by your clients (buyers) will help them understand the liabilities and will help free you of any potential liabilities associated with these transactions. Many times in the past we have dealt with property owners where tanks have leaked and the owner blames their former agent for not properly warning them of leaking tank liabilities; it was either not done by the agent or the owners could not remember the warnings.

Regardless, it is important for you to have proof that you have warned them of these liabilities and a completed Acknowledgment of Liabilities form should show that proof. This will enable you to have a more carefree existence after a sale so that you can better focus on future sales. It will also improve your future relationship with the client and provide a better chance for you to list their property when they are ready to sell. The property owner will either, not have to worry about having to deal with a tank issue when wanting to sell their property, or they will know that you warned them of such liabilities and the liability falls on them.

Feel free to contact us at 919-233-8626 or e-mail me at cboshoff@cohesion-inc.com to discuss these or other tank issues. We are currently working on a form that will allow you to better protect your clients as buyers by conducting a more thorough investigation of potential tanks on premises. If you wish to be added to our e-mail list to receive helpful information in the future, e-mail us with your contact information.

We often come to real estate office meetings to discuss tank issues and liabilities with agents. If you are interested for us to make such a visit, please feel free to contact us.

Sincerely yours,

Christoph Boshoff
PresidentCohesion, Inc.
919-233-8626 (O)

Due Diligence

Real Estate: Environmental Liabilities & Assessments (Phase I & II)

Many commercial properties carry environmental liabilities. Once you buy the property, you own the liability. There are ways to prevent or minimize buying these liabilities. A thorough investigation of the property by a professional can identify and quantify possible liabilities. Furthermore, a property owner has a second layer of protection through the Innocent Land Owner Act against unidentifiable liabilities as long as one can prove a thorough investigation was conducted prior to purchasing a property. A Phase I Environmental Site Assessment conducted according to ASTM standards is considered the standard for a thorough investigation. A Phase I Investigation provides “red flags” of potential or known liabilities of a property. A Phase II Assessment investigates the legitimacy or severity of the potential liabilities flagged during the Phase I.

Phase I Environmental Site Assessment

This practice is to identify recognized environmental conditions; i.e. the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, groundwater, or surface water of the property.  This includes hazardous substances of petroleum products even under conditions in compliance with laws.

The ASTM Publication E1527-05, defines good commercial and customary practice in the United States of America for conducting an environmental site assessment of a parcel of commercial real estate with respect to the range of contaminants within the scope of Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) (42 U.S.C. §9601) and petroleum products.  As such, this practice is intended to permit a user to satisfy one of the requirements to qualify for innocent landowner, contiguous property owner or bona fide prospective purchaser limitations on CERCLA liability (hereinafter, the landowner liability protection, or LLPs): that is, the practice that constitutes “all appropriate inquiry into previous ownership and uses of the property consistent with good commercial or customary practice as defined at 42 U.S.C. §9601(35)(B).

Ref:  Standard Practice for Environmental Site Assessments:  Phase I Environmental Site Assessment Process, ASTM Publication Designation: E1527-05 ©

Innocent Land Owner Act

Phase I Environmental Site Assessment

This practice (Phase I Environmental Site Assessment) is to identify recognized environmental conditions i.e. the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, groundwater, or surface water of the property. This includes hazardous substances of petroleum products even under conditions in compliance with laws.

The purpose of this practice is to define good commercial and customary practice in the United States of America for conducting an environmental site assessment of a parcel of commercial real estate with respect to the range of contaminants within the scope of Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) (42 U.S.C. §9601) and petroleum products. As such, this practice is intended to permit a user to satisfy one of the requirements to qualify for innocent landowner, contiguous property owner or bona fide prospective purchaser limitations on CERCLA liability (hereinafter, the landowner liability protection, or LLPs): that is, the practice that constitutes “all appropriate inquiry into previous ownership and uses of the property consistent with good commercial or customary practice as defined at 42 U.S.C. §9601(35)(B).

Ref: Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, ASTM Publication Designation: E1527-05 ©

 

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