Underground Oil Tanks

Section 5 of The Fuel Oil Code (Ontario Regulation 329) in the Energy Act states the following:

Where an underground tank will not be used, or where it has not been used for two years, whichever comes first, the owner of the tank shall:

a. Remove any product from the tank and connected piping.
b. Remove the tank from the ground, and
– remove the piping from the ground, or
– purge the piping of combustible vapours and permanently seal the ends of the piping by capping or plugging.
c. Where the soil around the tank is contaminated with oil from the tank, remove such contaminated soil, and
d. Fill any cavities caused by removal of the tank to grade level with clean land fill. R.R.O. 1990, Reg. 329, s.5.

Realtors, home inspectors, buyers and sellers must all be aware of this potentially costly issue. Determination of existence must, in part, come by way of disclosure (by the vendor) or by detection by way of a realtorÆs or home inspectorÆs examination of the property. The following should be carefully considered at all times:

Step One
It may be impossible to be 100% sure that an underground tank exists by a visual inspection. To be absolutely sure, a test dig or metal detection may be required.

Step Two
The underground storage tank must be removed. The costs for removal can rarely be determined up front.

Step Three
Standard environmental assessment protocols require the surrounding soil to be analyzed for contamination. The soil analysis must be performed by a Professional Engineer. Initial costs for this rarely exceed $1,500.

Step Four
If the soil sample was negative (no soil contamination) the owner has fulfilled their obligations. The engineering report becomes a very important document in the sale. There is no further risk to be considered by any other party in the real estate transaction. HOWEVER, if the soil is contaminated, proceed to Step 5.

Step Five
All contaminated soil must be removed or remediated under strict environmental guidelines and under the direct supervision of a Professional Engineer. The cost for this process can never be entirely quantified up front, but can be in excess of $10,000.00.

The Real Estate Transaction
Due to the potential of soil contamination and the unknown costs associated with the tank removal the risk to the buyer cannot be estimated. As such, no one but the owner of the property (vendor) should assume the risk/responsibility for the removal of the underground tank as required by Ontario law.


1. Underground fuel storage tanks currently in use.

Oil heating is still quite common in rural areas. Fuel storage tanks can be installed in the basement or stored underground. The buyer of a property must be warned of the following:
a. The removal of the underground tank may eventually be required. The       tank must also be registered and certified according to provincial legislation.
b. Most insurance companies will want the oil tank to be converted to an above-grade or in-house storage tank.

2. Existing, In-house Fuel Oil Storage Tanks

Many insurance companies are scrutinizing all older (15 years old, or more) in-house oil tanks. Buyers of homes and buildings must be cautioned regarding this recent change in insurance eligibility.

Copyright (2013) CBCG – Reprinted with permission