Aging oil tanks - How to lessen the difficulties they can cause
Insuring an immovable with an oil tank that is aging(1) or has been improperly or inadequately maintained can prove difficult. This in turn could jeopardize a transaction. When selling such an immovable, real estate brokers must be mindful of their duty to inform and advise, which will help reduce the problems that the presence of such a tank can cause.
THE SELLER’S BROKER must:
- obtain complete and accurate information from his client regarding the oil tank; in fact, the ''Declarations by the seller of the immovable'' form contains several questions concerning the oil tank and must be completed and attached to the promise to purchase;
- collect any documentation in support of these declarations (installation documents, warranties, invoices, receipts, letters, notices, etc.) and place them in the brokerage contract record;
- include the information that he was able to verify in the detailed description sheet;
- if the tank is aging, inform the seller that his tank may no longer meet the new requirements of his insurer or current regulations;
- notify the seller that a promise to purchase could be cancelled if a buyer is unable to insure the immovable because the tank is too old or obsolete or is found to be non-compliant during the inspection.
THE BUYER’S BROKER who is informed that the immovable has an oil tank must:
- obtain and verify the declarations by the seller of the immovable to find out the characteristics of the tank;
- inform his client of the presence of an oil tank and recommend that he make his promise to purchase conditional upon a specific inspection by an expert(2) of the tank, accessories, and all heating systems connected to it;
- recommend that the buyer check with oil suppliers whether the age of the tank risks causing a problem (some supplies refuse to deliver oil when a tank is too old or not up to standards);
- inform the buyer that he can also contact the seller’s oil supplier to get information on the tank and related heating systems’ maintenance and inspection plan;
- inform the buyer that an aging or improperly maintained oil tank may be difficult to insure even if the seller has never had any problems in this regard;
- suggest that he make his promise to purchase conditional upon obtaining a confirmation from an insurance company to insure the immovable(3).
To learn more, read:
(1) An ''aging tank'' is generally defined as one that is 15 to 20 years old for an outdoor tank or 25 years old for an indoor tank.
(2) See standard clause ''Tank and heating systems inspection''
(3) See standard clause ''Insurance commitment''