Underground Heating Oil Tanks When You Sell an Older Home in New Jersey

New Jersey doesn't require you to remove an underground heating oil tank that isn't leaking, but buyers, inspectors and the seller's disclosure form will all ask about it. If a tank is tested or removed, only a DEP-certified company can do the work, and if a leak turns up, it has to be reported to the DEP right away and cleaned up under the State's rules.

I'm Dennis Mark Interdonato with The Dennis Mark Group at Keller Williams Realty Ocean Living. If your home was heated with oil at any point, there may be a tank in the yard, or a record of one that was removed. When you're downsizing, the last thing you want is a tank question in the middle of attorney review. Here's how to handle it before you list.

What counts as an underground heating oil tank?

NJDEP's rules call it an unregulated heating oil tank: a tank that holds heating oil for on-site use in a residential building, with 10 percent or more of it below ground. For a home, there's no size cap; the 2,000-gallon limit in the rules applies only to non-residential tanks (N.J.A.C. 7:26F).

Do you have to remove it before you sell?

No. NJDEP's FAQ says that if there's no indication of a discharge, there's no State requirement that the tank be removed, and that if a discharge is discovered, remediation is required (NJDEP).

That's the law. The market is another matter. Buyers, their inspectors and sometimes their lenders want to know whether a tank is there and whether it's leaking.

How do you find out if there's a tank?

• Your own records: old oil bills, a past conversion to gas, a closure certificate from a removal years ago.
• What you can see: a fill pipe or vent pipe near the foundation, or capped oil lines in the basement where an old furnace or boiler used to be.
• A tank search by a qualified company, if the history is unclear.

The State's Seller's Property Condition Disclosure Statement asks whether there are any tanks on the property, above or underground, whether a tank was closed, and asks you to attach any test report or closure certificate. Answer it from your records, not from memory.

Who can test or remove a tank?

Not a handyman with an excavator. NJDEP says removal is done by a closure-certified individual working for a closure-certified firm, and investigation and cleanup are done by a DEP-certified subsurface evaluator or a Licensed Site Remediation Professional. State law bars uncertified tank removal, closure or subsurface evaluation (N.J.S.A. 58:10A-24.1). The town inspects the removal too, so ask the company which permits it pulls. Get its certification in writing with the estimate, and ask what the price includes: the excavation, any soil samples, the backfill and the paperwork you'll hand a buyer.

What happens if a leak is found?

1. Report it immediately. NJDEP says within 15 minutes, to the DEP hotline, 1-877-WARNDEP (1-877-927-6337).
2. Act within two business days. Hire a certified closure contractor, begin closure and hire an environmental professional (N.J.A.C. 7:26F).
3. Finish the cleanup. NJDEP issues a No Further Action letter after a discharge is remediated. If the tank was clean and passed the town's inspection, NJDEP says there's no need for one.

A leak doesn't automatically end a sale, but it changes the timeline. That's another reason to know early.

Is there State money to help?

There's a State fund, but don't plan a sale around it. NJDEP's Underground Storage Tank Fund page says applications for leaking residential tanks are still accepted but aren't being reviewed or processed at this time, with about a one-year wait, that applications for non-leaking tanks ended May 3, 2011, and that the fund has never guaranteed funding (NJDEP).

The fund's application instructions also cover selling a home in the middle of a funded cleanup: the seller and buyer sign an agreement that the seller stays responsible until the No Further Action letter (NJDEP instructions). Your attorney handles that piece.

What paperwork do buyers want?

• The closure certificate or the town's sign-off on the removal
• Any tank test or soil sample reports
• The No Further Action letter, if there was a discharge

Keep them with the deed and your permits. The same folder answers questions about certificates and permits before closing. Then find out what your home should bring on my home value page, and read the Downsizing Guide for how I plan the sale and the next purchase together.

Frequently Asked Questions

Do I have to remove an oil tank to sell my house in New Jersey?

Not by State law, if there's no sign of a leak. Buyers often ask for a test or removal, so it's worth deciding before you list.

Who can remove an underground oil tank in New Jersey?

A closure-certified individual working for a closure-certified firm. Investigation and cleanup need a DEP-certified subsurface evaluator or a Licensed Site Remediation Professional.

What is a No Further Action letter?

It's the letter NJDEP issues after a discharge is found and cleaned up. A clean tank that passed the town's inspection doesn't need one.

Will the State pay to remove my oil tank?

Not for a tank that isn't leaking; those applications ended in 2011. Leaking residential tank applications are accepted but not currently being processed, per NJDEP.

This is general information, not legal, tax or lending advice. A DEP-certified professional and your attorney confirm what applies to your property.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

• Should you update before selling or sell as-is?
• What paperwork you need to sell in New Jersey
• The Downsizing Guide and how I plan a downsizing move
• Have a question this didn't answer? Send it to Dennis Mark.