We have a multi family home listed that is now in the pending file which we call Attorney Review in NJ. The attorneys are going back and forth over an oil tank issue.
The home is currently heated by an oil burning furnace which the buyer does not like. The seller has agreed to have the underground oil tank removed (it’s almost impossible to get a mortgage with a buried tank) and have an above ground tank installed in the basement.
Here’s where it gets sticky. The buyer would like to convert to gas heat as it’s more efficient and a bit more “green.” The problem is that a gas conversion is probably in the range of $5,000 to $15,000. The seller’s cost to remove the old tank and have a new one installed is about $4,000.
If the seller has the old tank removed and a new tank installed the buyer can get the property and convert to gas whenever they want. But the buyer would like the conversion done to coincide with the closing (which is scheduled for a time when heat is needed.) The buyer and seller agree that doing the conversion at the same time as the tank removal saves money.
Removing the tank before closing and completing the conversion afterward isn’t feasible because there is a tenant occupying the property and the closing is scheduled for November – the beginning of the heating season in NJ.
Which makes more sense?
The seller removes the tank and pays for the conversion and is credited at closing….
The buyer removes the tank and does the conversion after the sale with money held in escrow to pay for the tank removal….
Are there options we haven’t considered?
If the seller does the removal and conversion, what happens if the transaction doesn’t close for some reason? There is a tenant living in the property, so they can’t be without heat.
If the buyer does the removal and conversion, they run the possibility of not being approved for their mortgage because of the underground tank.
What is the best solution?