New York Real Estate Salesperson ExaminationProperty Condition and DisclosuresHard
A New York real estate salesperson is listing a property with an underground heating oil tank. The seller states the tank has been out of use for 10 years and was simply filled with sand. What is the most critical disclosure or recommendation the salesperson should ensure is made to potential buyers?
- ASuggest the buyer inquire about the tank only if they plan to convert to a different heating system.
- BAdvise the buyer that New York law exempts abandoned tanks from further environmental scrutiny.
- CRecommend the buyer obtain a soil test around the tank area, as filling with sand does not prevent leaks.
- DDisclose that the tank was filled with sand, as this is a common and safe method of abandonment.
Show answer & explanationAnswer & explanation
Correct answer: C. Recommend the buyer obtain a soil test around the tank area, as filling with sand does not prevent leaks.
Filling an underground storage tank with sand is a method of 'abandonment in place,' but it does not address potential prior leaks or future corrosion. Any underground storage tank, especially one out of use, poses a significant environmental liability risk. A soil test is crucial to identify contamination.
Why the other options are wrong
- A. The environmental risk from a leaking UST is a material fact regardless of the buyer's future heating plans and requires disclosure and due diligence.
- B. New York law does not exempt abandoned tanks from environmental scrutiny; owners can still be held liable for contamination from such tanks.
- D. While sand-filling is a method of abandonment, it's not always 'safe' regarding potential prior contamination, and the method itself does not mitigate existing environmental issues.
Underground Storage Tank (UST) Disclosure
Sellers must disclose the presence and status of underground storage tanks (USTs), especially heating oil tanks, due to the high risk of environmental contamination and associated liability.
- High risk of leaks and soil/groundwater contamination.
- Cleanup is very expensive.
- Disclosure of presence and status is crucial.
- Abandonment in place (e.g., sand-filling) does not remove liability for past leaks.
Memory trick: USTs are a hidden 'Time Bomb'; disclose, test, or face cleanup's high cost, for sure you'll succumb!