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Tuesday, June 30, 2009

Oil Tanks

by Shafiq Muljiani (Sutton Grp-West Coast Realty) on Tue, Jun, 30, 2009 02:32 AM

Categories:Underground Oil Tanks Vancouver

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.

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