A New Haven Realtor has been researching underground oil tanks, and has been surprised at his findings.

Prompted by recent incidents with homebuyers, Mike Sexton, broker/manager at H. Pearce Real Estate Co. in North Haven, was curious to see who would be liable if an underground oil tank was leaking, and if homeowner’s insurance would cover such an incident.

“I’ve found out that if someone were to have a spill on their property and the spill were to cause financial damage, or need to be cleaned up or cause a neighbor to be harmed, that it’s specifically now excluded under environmental riders of insurance policies and no longer covered,” said Sexton.

His feeling on the issue is so strong that he’s been known to say, “The buyer’s broker that sells their client a buried oil tank ought to be in jail.”

He keeps a waiver on hand in his office, which he jokingly refers to as the “damn fool form,” that he has buyers sign if they’re still interested in purchasing a home with a buried oil tank.

“I recommend that they not buy these properties. It’s that dramatic,” said Sexton.

The Connecticut landscape is dotted with thousands of buried oil tanks, both residential and commercial, all of varying ages and levels of decomposition. If properly installed and maintained, a buried oil tank should have a reasonably long life.

Sexton, posing as a homeowner, called several insurance agencies looking for insurance on a buried oil tank.

“They [the insurance agent] looked around for coverage and eventually found it with Lloyds of London. So instead of just paying $800 a year for the entire house, it was going to cost me $3,000 to get coverage with the oil tank,” said Sexton. “So coverage is out there, but it’s going to cost you.”

Costly Luxury

Formerly, Connecticut embraced an amnesty program that would pay to clean up underground oil tanks and wouldn’t pursue legal liability avenues. However, the funding behind the amnesty program was quickly used up and no longer is available.

Therefore, if a new homeowner discovers an underground oil tank and wants it removed, they could very well be liable for the cost of its cleanup. And, as Sexton said, “The potential cost of cleanup is as close to unlimited as you can get.”

Many of the tanks were built closer to cities where lots are smaller, and a large number where constructed in the late 1970s and 1980s.

“You were more likely to see them in that time because they were put in as a luxury feature,” said Sexton. “After the oil crisis in the 1970s many people buried immense oil reservoirs in their yard an bought oil to last through the whole winter. Those tanks are 20 years old now and a lot of them weren’t even installed correctly.”

If properly installed in sandy soil below the water table, underground oil tanks have less of a chance of decomposing. However, if a tank was buried soil, it could be prone to rusting and leaking oil.

A common reaction, said Sexton, is to abandon the underground tank and “bury your head in the sand.” Unfortunately, he said, this then becomes the problem when selling the house and whoever owns the house next.