When buying or selling a commercial property, what do you think about? What’s on top, right? Well, what’s below the surface must be considered, as it is just as important as the beauty and functionality of the building and its surroundings above ground. Therefore, it is crucial to know if there is an underground storage tank (UST) and its condition.
Many industries, such as chemicals, petroleum, and manufacturing, have USTs to store hazardous materials such as gasoline, diesel fuel, and chemicals. While USTs can be a convenient and cost-effective solution for storing these materials, they pose significant environmental and health risks if not properly managed.
From a regulatory perspective, know that various tanks that house different substances have different rules. For example, storage tanks that contain diesel fuel, gasoline or other hazardous chemicals have strict registration, testing and inspection requirements. In contrast, fuel oil tanks for on-premises use are often not highly regulated.
Environmental Testing
Are you buying or selling commercial property and unsure if there is an underground storage tank (UST) on the property? If so, it is essential to have a Phase I environmental site assessment (Phase I ESA or Phase 1) done. This assessment will inspect the property and investigate its history to uncover potential environmental issues.
Afterward, a Phase II Environmental Site Assessment (Phase II ESA) will utilize sampling methodologies to confirm the presence of contaminants and potential environmental liabilities.
You Have Decided To Buy or Sell a Commercial Property with a UST
Now that you have decided to buy or sell a commercial property with an underground storage tank (UST), it can be a complex process that requires careful consideration and due diligence to avoid potential liabilities and financial risks. Here we outline several key factors that must be considered.
Regulations and Technical Requirements
Regulated underground storage tanks are subject to various federal and state regulations, including the Resource Conservation and Recovery Act (RCRA) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). These regulations require owners and operators of USTs to register their tanks, conduct regular inspections, and maintain proper records.
Failure to comply with these regulations can result in significant fines, penalties, and potential liability for contamination or cleanup costs.
Regulation and technical requirements can vary by municipality and state.
Environmental Risks
A big concern for underground storage tanks is leaking. USTs have the potential to leak or release hazardous substances into the environment, which can contaminate soil, groundwater, and surface water. This can result in significant environmental damage and potential health risks.
Older single-walled underground storage tanks may be harder to find leaks than the new double-walled models. In addition, if water is found in the storage tank, it generally indicates a leak.
Suppose you are unaware of a leak before purchasing the commercial property. In that case, if a leak is found after, you can be legally responsible for removing the storage tank and cleaning the affected soil, which can come at an extremely high cost.
However, in 2002 Congress passed the “Small Business Liability Relief and Brownfields Revitalization Act” (Brownfields Amendments). New landowners have liability protection from CERCLA. The “All Appropriate Inquiry Rule” in the Brownfields Amendments offers relief from liability named the “innocent landowner defense.” Still, this defense can only be used to get out of liability if “all appropriate inquiries” were conducted before the acquisition of the property. These inquiries would be the Phase I and Phase II ESA assessments to meet the due diligence requirements.
From a Financial Perspective
USTs can impact the value of a property. Therefore as a commercial property owner maintaining it can eliminate potential costs of any required remediation or cleanup. So, when the time comes to sell, there will be no underground storage tank (UST) problems.
Additionally, lenders may require additional due diligence and environmental assessments before providing financing for a property with a UST, which can add additional costs and delays to the transaction.
Liability and Insurance
We continue to stress how USTs can create significant liability risks for property owners. In addition, there are potential financial risks for lenders and insurers. Therefore, buyers and sellers must ensure appropriate insurance coverage to mitigate these risks.
Additionally, buyers should consider negotiating applicable indemnification and hold harmless provisions in the purchase agreement to protect against potential liabilities.
Transferring Commercial Property Ownership
When buying or selling a property with a UST, it is vital to ensure that all necessary permits and approvals are in place to transfer ownership. This may include obtaining a new registration for the tank, conducting a further inspection, or obtaining approval for any remediation measures that may be required.
If the commercial underground storage tank (UST) has been removed successfully and no contamination is left behind, it is vital to have the proper documentation in place.
Buying or Selling a Commercial Property with an Underground Storage Tank and Need Tank Removal?
Stewart Environmental Remediation is a professional commercial property oil tank removal contractor. We remove all types of tanks, such as oil tanks, diesel tanks, gasoline tanks, and others.
If buying or selling a commercial property with an underground storage tank, do not worry. Contact Stewart Environmental Remediation for complete guidance and help.
We service New Jersey, Pennsylvania and Connecticut.
