Oil Tanks – What buyers of Vancouver real estate should know!

Before 1957, when natural gas was introduced to Vancouver, many homes in the Greater Vancouver Area were heated by oil furnaces with fuel tanks buried in the back or side yard. With the change to natural gas, these oil storage tanks were filled with sand or capped. However, because of corrosion or improper decommissioning, these tanks now present potential environmental hazards and sources of liability. According to the Ministry of Environment “Facts on Contaminated Sites”, these underground oil tanks can cause contamination of soil and groundwater, and pose a fire or explosion hazard.

The Environmental Management Act, (the “EMA”) is very clear in setting out that a current owner, a previous owner or a person who cause the site to be contaminated, among others, are responsible for remediation of a contaminated site. Therefore, if you purchase a property with a leaking oil tank, you could be responsible for removal of the oil tank and remediation of not only your property, but your neighbours affected property. The costs of remediation are unlimited and unpredictable, and your insurance will likely not cover these costs.

To avoid liability, a purchaser must prove that he or she meets the definition of an “innocent buyer” under section 46 of the EMA. To meet this standard, a purchase must show that the site was already contaminated, that they had no reason to suspect such contamination, and that they made all appropriate inquiries into the site’s previous ownership and uses AND undertook other investigation consistent with customary practices.

To fulfill your due diligence and avoid having to undertake the costs and inconvenience of remediating an existing oil tank, we recommend that buyers take the following are steps during the purchasing process:

1. Make your offer to purchase subject to inspection by a building inspector or underground storage tank locator, who can confirm there is no oil tank on the property, and that the property is not a “contaminated site” under EMA regulations.
2. If a tank is found, put a condition in your offer that the tank be removed by a qualified tank removal contractor, and that remediation be completed in accordance with all legal standards, including local by-laws, the EMA and the current BC Fire Code Regulation.
3. Make it a condition of the purchase that once the work is done, or if it has already been completed, the purchaser shall provide a Certificate of Compliance, stating that the site has been remediated to the environmental standards of the Contaminated Sites Regulation, and copies of reports that set out the details of work done.
4. Request a completed Property Disclosure Statement (PDS), which asks the seller to confirm there is no buried oil tank and no contamination. You may be able to hold the seller liable if they did not completely answer the question to the best of their knowledge or if they did not properly decommission or remove an oil tank.
5. Disclose any doubts or questions to your realtor and lawyer!

For more information on Underground Storage Tanks or other concerns when buying residential or commercial property in Vancouver, please call Ian W. Burroughs or another member of our Real Estate team.