When Rhonda and Micheal Honing discovered an oil tank buried in the garden of their North Vancouver home in 2016, they couldn’t have been more surprised. By that time they had been living in the house for 15 years and had never suspected for a minute that a tank was buried there. In fact, during contract negotiations the previous owners had disclosed that an internal oil tank had been removed in 1977, when the house was upgraded to natural gas. No mention of any further tanks.
The Honings decided to remove the tank in order to mitigate any future issues. But aside from the oil tank shaped hole in their garden they also were left with one giant question—what did the previous owners know about the tank?
Soil contamination
When a tank is located to find out if there is any fuel left in it. If a tank corrodes and holes develop in it any remaining oil can leak out and contaminate the surrounding soil. And that can lead to a very costly cleanup bill, and the possibility of legal action. This is where things can get messy in more ways than one.
Caveat emptor
For the most part, oil tank liability falls under the banner of caveat emptor—buyer beware. The buyer needs to do their due diligence to make sure no hidden surprises await, and this means getting the property professionally scanned before removing subjects. Sometimes the seller will provide a report indicating that no oil tank exists on the site, but can a buyer rely on such a report? ‘They can’, says Joseph Salazar of GeoScan Subsurface Surveys ‘provided they understand the limitations of the report.’ GeoScan uses a combination of Ground Penetrating Radar (GPR), which can detect objects up to 8 feet below surface, metal detection and electromagnetic detection. ‘You need to know if the entire site was clear on the day of the scan. For example, was there a car parked in the driveway? An oil tank could’ve been perfectly placed underneath. Is there a raised deck? GPR relies on contact with the ground so raised decks can be problematic, and they’re usually close to the house, which is prime oil tank territory’.
Barring a full excavation of the site there is no 100% fail-safe way to check for oil tanks. ‘GPR is the best and most conclusive technique’, says Salazar ‘but finding an oil tank is like searching for clues to piece together a puzzle, and that might be visual clues like vent or supply pipes, and scan data from GPR and metal detection. Every technology has it’s capabilities and limitations, and the interpretation of the data relies on the skill of the technician. That said, we can tell you with about 99% confidence whether you have a tank or not’.
So how common are oil tanks nowadays? ‘We’ve done about 200-300 scans a year for the last 10 years, and we find a tank in about 1 out of 4 properties’ says Salazar.
A GeoScan technician performing a GPR scan for a buried oil tank
Removing an oil tank
Finding an oil tank is by no means a deal breaker though. When Seamus and Aleesha Connolly discovered an oil tank on the property they were hoping to buy on Westsyde Road in Kamloops back in August 2009, they asked the sellers to remove it before completing the deal. The sellers, who bought the property in 1988 and knew nothing about the tank, were happy to comply with the request. Removing intact tanks is not an especially expensive or time-consuming task. A couple of thousand dollars and a days work should see you out of the woods—provided everything goes smoothly.
A couple of months after the Connollys took possession of their new home, Aleesha noticed an odd smell in the basement one day. The sheets on the bed she was changing actually smelled of fuel, and this set alarm bells ringing. With no idea of what the source of the smell might be, the Connollys starting breaking into the walls of the basement room, only to discover dark stains on the back of some of the panels.
It turned out that the soil around their house was contaminated with oil and they had to immediately start excavating in order to remediate. After about 80 cubic meters of soil were removed the Connollys finally got the all-clear from their environmental engineer indicating that contamination levels were within permissible thresholds.
Understandably, the Connollys felt aggrieved with the unexpected $14,000 bill they were facing and so they brought a legal action against the previous owners and the contractor who carried out the tank removal. After an arduous legal battle the courts eventually ruled against the contractor, essentially for failing to do his job properly. It seems that at some point during the excavation about 5 litres of fuel escaped from the tank—enough to cause a significant amount of contamination.
Material latent defects
While caveat emptor may mitigate the sellers liability in the case of a hidden tank, it is by no means a watertight backstop. Sellers are required to disclose any ‘material latent defects’ in the Property Disclosure Statement, a mandatory document for any deal. But this only requires them to disclose what they know, so if they don’t know about any buried oil tanks, they’re off the hook if one is found post-completion. It’s on the buyer to deal with the tank and any contamination. If, however, it can be proven that the sellers had reason to believe there was a buried oil tank, the liability might turn 180 degrees back to the seller.
The Honings in North Van submitted to the court that the previous owner, who was a retired plumber and gasfitter, had installed an irrigation system and a sewer line which ran just inches from the vent pipe of the oil tank. The judge described how he ‘artfully’ responded to questions about the oil tank, avoiding an outright denial of his knowledge of it. This was enough to determine that he knew more than he was letting on. The court ruled that the seller did in fact know, or have good reason to believe, that an oil tank was buried under the garden, and ordered him to reimburse the Honings to the tune of $37,000.
Contract wording
Another possible route past caveat emptor is the wording of the contract of purchase and sale. A 2018 case in Esquimalt, BC, saw an award of $45,000 against the sellers of a property on which a leaky tank was found. The realtor acting on behalf of the purchasers did her clients a huge favour by including an addendum in the contract which effectively held the sellers responsible for any oil tank found at any point in the future. Although it is by no means a given that sellers will agree to such an addendum in every case, it is always worth trying to include one
Stay out of court
The truth is, there are no hard and fast rules when it comes to oil tanks—every situation is different. It is in the interest of both buyers and sellers to do everything possible to get the truth out there as early as possible and prevent the discovery of any hidden surprises further down the road. Court proceedings are a very expensive and time-consuming worst-case outcome that often feels like a roll of the dice for those involved—you just never know which way the judge is going to rule.
If you want my professional advice about oil tank addendums, feel free to get in touch!
Sources:
Honing v. Phinney, BC Supreme Court
Connolly v. Jones et al., BC Provincial Court
Walton v. Warren, BC Supreme Court
Residential Heating Oil Storage Tanks Fact Sheet, BC Ministry of Environment
Contaminated Sites Remediation Liability Overview, BC Ministry of Environment
Environmental Management Act, SBC 2003
