Asbestos, Electrical & Lead - Oh My!

novahomesickFebruary 10, 2009

I could really use the advice and opinions of all the experienced homeowners and realtors who look at these boards. I love this board and find it a great source of unvarnished opinion and great advice. I used to post a lot but we unexpectedly expanded our family a year ago and I was relegated to being a lurker. This is a bit long but I want to be clear and give enough information to get some good advice, if you don't mind.

I recently placed a purchase contract on a 70 year old but charming home in a great neighborhood in my area. I'm in Metropolitan DC which saw a huge run-up in price between 2000-2006 . We have seen some of that escalation erode but not as much as other areas like California, Florida etc.

One expects various problems when purchasing a home built in 1940 but I'm a bit overwhelmed by the results of the inspection.

There are various minor issues like a few cracked window panes, a leaky faucet here and there, a deteriorating driveway, a 30-year old hot water heater, a main drain pipe at the point of failure etc. that I'm willing to overlook and handle myself without asking anything from the seller. However, the inspection uncovered five areas of great concern to me. Actually, that's an understatement. I'm somewhat freaked out.

1. Electrical The inspector thinks the electrical system is shot. The electrical panel was hanging away from the wall. The main panel is a spaghetti pot of wires that reflect the history of American wiring in the 20th century. It's all present from Knot and Tube to BX to Romex. There is aluminum branch circuit wiring . Aluminum is spliced to copper. It is overloaded and has two loose circuits. The panel is so crowded that inspector had trouble removing and replacing the cover. 90% of the plugs in the house are two pronged plus there are no GFCI outlets in the older bathrooms. The panel is connected to two large, old BX electrical cables which also seem to be holding it up. The only smoke detectors are outside the bedrooms.

Also, the above ground electrical wires to the house are drooping down to about 10 feet above ground. They are hanging down over the front entry sidewalk. Funnily enough, these wires do not appear in any of the marketing pictures taken when the house was put up for sale. Anyway, the utility company should fix the problem but will likely have to add an additional mast to the roof or possibly a new utility pole in the front yard. Imagine what that will do to curb appeal. Also, the utility company will likely cut the top off a gorgeous pine to free the wires from their current home among the branches. We asked the owner about it and received a blank stare and a shrug.

2. Lead-based paint  it's an old house so, of course, lead-based paint is present. There are multiple layers of wallpaper with at least two coats of paint on top.....everywhere. Now, if we have to go cutting into walls to rewire the house are we at risk of creating a lead-based paint problem with all the dust?

3. Friable Asbestos  There is friable and degrading asbestos in the crawlspaces and in an old, unused boiler in the basement. The crawlspace also needs to be re-insulated. This crawlspace is situated under the master bedroom. The inspector strongly recommended asbestos remediation which can range from encapsulation to complete removal. I have a compromised immune system and am afraid of the health risk to kids, cats, dogs, and me.

4. There is a de-commissioned underground heating oil storage tank. The owner believes it was emptied but does not know if it was filled with sand. The inspector recommended it be removed and said the EPA has money available to assist. He also said it would be a good idea to have the soil tested. We are already having the well water tested.

5. The kitchen in the house was remodeled along with the master bathroom a couple of years ago. The inspector took one look at the electrical box and wondered if permits had been pulled for the work. We asked the seller and he said yes, permits had been pulled. We asked to see them. He e-mailed us today that he checked with his contractor and permits were not pulled because his contractor felt the electrical and plumbing work involved was so minor it didn't warrant permits. Any thought on this?

Now, this house was priced $130,000 over the comps in the area. It's been on the market a year. The sellers lowered and we came up but the house is still priced $80,000 over the comps. I bit because the house has a unique charm and character that is rare in my area and the lot is terrific. It also has a first floor master which I really want plus a remodeled master bath. On the positive side, the heating system is brand new and the roof is in great shape.

The owner believes I am "stealing" his property at the current price. He bought the house in 2004 and initially wanted $300,000 more than he paid. He has lowered substantially in the last year. However, sales prices in his zip code and the neighboring zips are now about 5% below 2004. The seller is FSBO and disclosed none of the above. I don't know if he had an inspection in 2004 and is just unaware of the problems listed above. The owners were packing on inspection day and had taken down all the pictures and packed up the knick-knacks. There are three contingencies in our contract that have yet to be satisfied so I was most surprised. I have a realtor and am putting down 55% of the purchase price in cash and financing the rest.

I haven't talked to my realtor since I got the inspection results this morning. Are these significant problems? Should I run for the nearest exit, ask for a massive price drop, have them correct, or renegotiate and arrive somewhere in the middle? Opinions wanted. Thanks in advance.

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You're a braver soul then me. I'd run from this house. Only you know if you're willing to take the risks both to your health and to your finances. Is the house really that unique that you believe it's worth putting all your efforts into it? Especially in light of paying about $80k over comps?

    Bookmark   February 10, 2009 at 4:16PM
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I would run, too.

    Bookmark   February 10, 2009 at 5:01PM
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Wall paint has not had lead for about a hundred years.
Gloss trim paint had lead acetate as a dryer and gloss improver.

If the walls are plaster it is not hard to use a 4 inch razor scrapper to remove the wall paper, it is just a mess.

The electric sounds like many very old houses.
It sounds like it might not have been updated if there are multiple wires.
The POCO will install a new feed if you replace the electrical panel and upgrade to 200 amp service.
It will be a triplex (two insulated hots and a bare neutral). It is very unlikely new pole or mast will be needed, just more tension on the line.

If you like old houses and there are no structural problems it sounds typical for the age.

    Bookmark   February 10, 2009 at 5:04PM
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I wouldn't pay $80K over comps for a house that needs that much work. Have you had an appraisal from the bank? I'd be surprised if the bank would lend more than the house is worth.

    Bookmark   February 10, 2009 at 5:52PM
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I love old houses and I would walk away from this one before overpaying by $80K.

The asbestos would definitely have to be remediated.
Since you are testing the well water, you will know if the oil drum is a problem now.
The electrical will cost you a nice chunk of change unless you can do it yourself. Our old (1920s) house had a plethora of wiring types, just as this house you are looking at does. My ex-husband was able to rewire, but we did not need a second panel. For that you would need an electrican and permits.
As far as lead based paint, the epa assumes all houses built prior to 1978 has some lead paint in them. That doesn't mean they do, just that, for purchasing a house purposes, the assumption is there is lead based paint if the house is over 30 years old. Paints containing up to 50 percent lead were used on both the inside and outside of homes through the 1950s. Lead was still used in some household paints manufactured until 1978, although these newer paints usually contained much smaller amounts of lead. There are steps you can take to minimize exposure to lead paint when remodeling (that is what holes in your walls would equal), so do a google search.

Best wishes.

    Bookmark   February 10, 2009 at 6:23PM
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You need to have specialist (electrician, asbestos , lead paint and tank removal specialists, EPA funds availability etc.) come in to give you some good estimates for a basis of what you will face for an expense and the total cost of the house once everything is done.
You probably need to extend the inspection timeframe in the contract to get all the estimates. I can't overemphisize the importance of getting these estimates, the actual cost can be quite abit more than you are willing to pay.

    Bookmark   February 10, 2009 at 6:27PM
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berniek's advice is spot on. Get ALL estimates before you move forward in order to understand just how much this house is REALLY going to cost.

The issues mentioned can of course be fixed...but will be quite pricey. Then, realize that once you start, especially in an old home, chances are very good that other issues will need repair as well.

Even if the well water tests negative for oil, you need the seller to supply paperwork dcoumenting that the tank was properly decommssioned. If he does not, you could still face an oil leak in the future..and depending upon how far it migrates through the soil prior to discovery, mitigation can go into the thousands and thousands. Best bet is to have the tank pulled out as the HI suggested.

Most insurance companies will no longer insure knob and tube and/or aluminum wired homes unless an electrician will certify that all wiring is in perfect shape. Few if any chances are you will need to rewire all for insurance purposes. Costly indeed.

Bottom line is that there is quite a bit of work that this home needs....and quite a hassle to live there while the work is done. Since you have an immune system issue, can you plan to live elsewhere while the asbestos is being abated?

If that will incur additonal expoense for you, don't forget to include that in your budget.

I live in an area that has mostly old homes (100 -300 years old)....many are in excellent the home you are referring to is not typical of an old is typical of an old home that has been maintained in a minimal way...without much attention to doing repairs and/or upgrades thoroughly or correctly.

That being the case, chances are that more issues will materialize as time goes by...

Personally, IMO, this house would have to be something really amazing to warrant all of the expense and hassle that will be required to make it as it should be...

In this market, it seems that it should not be very hard to do much better, at less cost and less hassle than this house by far.

    Bookmark   February 10, 2009 at 6:52PM
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Have you added up the costs for this house? You have 10-20K in electrical upgrades, at least $2000 for a new water heater and the other plumbing issues (probably much, much more, depending on what you mean by the "main drain"- if you mean the one outside, I would add at least 5K to that number), 3-20K in new windows, asbestos remediation (no clue on the costs there, but I do know it's not cheap), oil tank removal and clean up (no idea there either, but the fact that he doesn't even know it's empty does not bode well), another several thousand for a new driveway... Then you've got paint over wallpaper to contend with (know what's worst than removing wallpaper? Wallpaper that's been painted over).

And on top of the at least 25K above (it would honestly not surprise me if the repairs hit 100K), you're paying another 80K over the comps. I would run.

I would also just about guarantee that the reason the permits weren't pulled in the remodel is because there's no way that the electrical work would be approved without serious work.

Another thing to ask- was the mold remediated when the master bath was remodeled? Every single old tile shower I've ever heard about being torn out had mold in the walls. Grout fails.

As far as the seller and the non-disclosure and permit stuff goes, I would not trust him at all. He's either a liar or an idiot- neither of those are people you want to trust with a purchase of that size.

    Bookmark   February 10, 2009 at 7:05PM
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"Most insurance companies will no longer insure knob and tube and/or aluminum wired homes..."

never had an issue with it in Virginia.

"Another thing to ask- was the mold remediated when the master bath was remodeled? Every single old tile shower I've ever heard about being torn out had mold in the walls. Grout fails."

If the bathrooms are original tile it will be on a mud bed job. About an inch of mortar.
I have never seen one of these have mold in the wall.
Water has a tough time getting through an inch or more of mortar.

    Bookmark   February 10, 2009 at 7:14PM
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I'm with the group that thinks $80K over comps plus the work needed (wouldn't be surprised if it did hit $100K in the DC area) is a run-as-fast-as-you-can no brainer.

However, I would like to know where in Metro DC did you find a house on a well? I would not have thought any still existed.

    Bookmark   February 10, 2009 at 7:21PM
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Thanks to all for your good advice. Frankly, I started strapping on my running shoes when I read the full inspection report this morning. The two words "friable asbestos" are words no buyer wants to hear. Very scary.

I wanted to check with others and see if I was overreacting on the other issues. The house seems to be screaming "Money Pit". I might think differently if it was marketed and priced like a fixer but it wasn't. It's being marketed and priced as a premium and remodeled house. Interesting that new homes in that area are now less expensive per square foot than many existing homes.

Muddypond, there are many houses in Northern Viriginia that are still on wells and septic. I don't think you find too many in very close-in areas like Arlington and City of Alexandria but wells and septic systems are not unusual in Fairfax, Falls Church, and beyond.

I think my home inspector deserves a medal or, at least, a great bottle of scotch.

Please keep commenting.

    Bookmark   February 10, 2009 at 8:52PM
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Oh, OK. I thought you were referring to DC itself.

    Bookmark   February 10, 2009 at 9:58PM
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"Most insurance companies will no longer insure knob and tube and/or aluminum wired homes..."

brickeyee: never had an issue with it in Virginia.

You will. It is just a matter of time.

If you need more documentation, just google knob & tube and insurance...or aluminum wiring and insurance.

Up until a few years ago, it was not such an issue. IMO...the Katrina losses probably pushed the insurer's over the edge....

Here in NJ, it is definetly an issue. That said, if an insurance company won't insure for it here in NJ (or will charge exhorbitant rates to do so) chances are they have the same policy the wiring is what it is, regardless of which state in which the house is located.

    Bookmark   February 11, 2009 at 12:00AM
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Well - we've been known to take on the worst house on the block. But each time we've gotten the house at a low, low price for the area by respectfully pointing out all that needed to be done. Not sure your seller sounds reasonable to that though. By the time we were finished fixing & repairing, the house value was about on par with the neighborhood. Sounds like on this project, you might be upside down once you've paid over comps + poured so much into renovation.

Everything sounds fixable on this house but as everyone else has stated, it has the potential to be quite spendy. We almost always discover things during the project that will tack on a little more. Also, it's no picnic living in a massive renovation....

    Bookmark   February 11, 2009 at 9:09AM
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Unclear what the contingencies you have are, but can you just "run"?

If you like the house, and you're willing to undertake the potential work, it's worth trying to negotiate further IMHO. It may not reap rewards, but it's worth a try, especially if your offer was 80k over comps for a house that sounds like should be at or below comps. If they refuse to correct any of the problems or give a sizable credit, then walk. But maybe they'll be realistic after a year. Or maybe they won't. If they're not, pull the offer and come back in a couple of months if the house is still unsold, and make another, lower offer.

    Bookmark   February 11, 2009 at 11:41AM
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We're looking at the same house!! only mine is in Raleigh and was built in the 50's. In addition to having it inspected (it failed on so many counts) I had an all day walk through with a remodeling contractor who gave me a realistic view of the repairs. They actually weren't as scary as I thought but they were still a sizeable chunk of change.

Here's the kicker - the current owner bought the house in this run down condition and has been ignoring all the faults. He has not put one penny into fixing it up or finishing the remodeling that the original owners started. He also thought this property would be his gold mine to pay for his retirement (he might be 40 and wants to live at the beach and fish all day). He isn't thrilled with my low ball offers. I say "offers" because every couple of months I come back and offer LESS than my previous offer - always with an explanation pointing out how such-and-such just went up 200% thereby raising the cost of repairs. His poor real estate agent doesn't know what to do with him. No one else has even looked at this house (I blame the asbestos siding, but it could be all the other problems).

Within a month it goes into foreclosure and I will just buy it from the bank. My last offer was just over the default amount and I told them all I wouldn't go any higher (and I won't). I like the house I own now but would love to buy this one and fix it up. It is in a choice location for me and my job but with $80K+ in repairs it isn't worth what the seller thinks it is.

Oh, and around here I can take a short class and do the asbestos removal myself (the class is only about how to wrap up the siding chunks and label it for the land fill). The walls in this old house are painted over wood paneling - very easy to remove, which saves on the rewire job.

    Bookmark   February 11, 2009 at 2:36PM
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My contract has a home inspection contingency plus appraisal and financing contingencies that are due to be satisfied next week. Contractually, I can walk right now or submit a list of repairs, along with a copy of the inspection report. We are going to walk.

With the right negotiation, we can handle the electrical problems. We knew before inspection that the electrical would be problematic. It was just a question of degree and we had a reserve set aside to fix the problems. The advice I've received helped me "fall out of love" and remember my priorities. Thank you.

The deal killers are the health risks, the remediation work associated with the asbestos, and the remodeling work that was done without permits. I'm not willing to take on those types of risks and I'm not going to get into a dog fight with the owners over remediation techniques, testing, and permit problems. There is no way that they'll agree to what I would demand to close this deal.

Given the work I know was done in the remodeling, I don't buy that one can remodel a kitchen and a master bathroom without having to pull plumbing and electrical permits. The legal liability and impact on my ability to remodel or resell is cringe-worthy. Buyer Beware! Make sure you ask for copies of the permits, in your contract, when you know remodeling has been done.

Finally, the seller's attitude does not inspire trust. I don't conduct business this way and I don't work with people who aren't aboveboard and willing to own up to mistakes.

The sellers are fully aware that we know the work they did was performed without permits and they should be doing everything possible to reassure us, instead of offering lame excuses. They have so many choices that they are choosing not to exercise to keep this deal alive. Ethics matter.

On a bright note, it's been a hechuva learning opportunity. In the last 24 hours, I've so much about asbestos and lead-based paint health risks, history, testing and remediation my head and lungs hurt. Very interesting stuff.

Moving on to the next house.....

    Bookmark   February 11, 2009 at 2:40PM
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novahomesick: "Make sure you ask for copies of the permits, in your contract, when you know remodeling has been done."

Great advice...but it needs to be taken one step further. Make sure that final approvals were issued. Many folks take out permits....but never have the stage inspections that allow them to obtain the final approval. You WANT that final seal of approval.

That said, IMO, you made a wise choice. I bet the next house you find will be far better than this one in all respects. :-)

    Bookmark   February 11, 2009 at 3:43PM
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I would share a copy of the inspection report with the homeowners and ask them for a $150K reduction due to the issues. If they refuse, and they will, at least they will be required to disclose to the next potential buyer about the issues that your home inspector found. And, I would also notify them in writing as well, so they can't claim ignorance about the issues for any future buyers, which sounds like what they might try to do.

    Bookmark   February 12, 2009 at 5:50PM
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Its a money pit indeed but theres nothing here that cant be fixed with time and money. If you like "project" houses, and have the wherewithal, perhaps this one is perfect for you.

Many areas in California are not doing as bad as the news suggests. These generally include the areas closest to the ocean which are older and established. None of this should be used as justification to overpay for the home youre considering in DC. Naturally the owner thinks youre stealing his house. What owner doesnt think his home is worth more then it is especially a FSBO? With a one year DOM, someone needs to enlighten him (apparently, the market alone hasnt). Unless you can document that George Washington personally slept in this house, I think youre making a huge mistake.

Deals abound, even in Washington DC, and there is no need to compromise or overpay. Now is the time to buy quality way below the market. Id be most concerned about your realtor who 1) Doesnt appear to be keeping your best interests in mind, and 2) Does not appear to be a particularly skilled negotiator. FSBO sellers can be irrational and I suspect youll just insult him with a realistic offer, especially since he believes he has a live one now. Anyone who bought in 2004 likely bought near the peak, at bubble prices, and cannot/should not expect to make a huge profit.

How long have you been looking? With 55% down, you have a reasonably strong position especially in this market. No home is rare or unique. To satisfy myself, Id offer market value minus a quick and conservative estimate for repairs (obtained from a local contractor), which the seller likely wont take, and then keep looking.

    Bookmark   February 12, 2009 at 7:59PM
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Live wire oak, that's funny. Had we proceeded my number was $150,000 pending soil, water,lead, and air testing, on his dime, plus an escrow for full asbestos remediation and complete disclosure on any other known defects or hazards. That's not going to happen so we moved on.

I think the seller's a terrible human being. This guy would have allowed a family with children to move into a home that could ruin their health and finances. The abestos in the house is not the hard-pressed tile kind that is only a problem if it's disturbed. This is the soft, flaky airborne kind floating in all the crawl spaces and in the utility area. The photos look like a poster child for the EPA's website.

We notified the seller that we were voiding the contract. He revealed to my agent that he knew about all the problems mentioned so he wasn't surprised. Apparently, this very scenario has happened to the seller before. So, it sounds like he's planning to wait for the next buyer and hope they have a less thorough inspector. He believes his property is worth a million dollars and he's wants his money.

Virginia is a "buyer beware" state that allows homeowners to either disclose material defects or disclaim knowledge meaning the owner makes no representations or warranties as to the condition of the property or any improvements.

I really don't know if some future buyer would have a giant lawsuit or not but why should they ever be placed in such a position? I wish there was something we could do to warn others.

That being said, the contract says we are to provide him with a copy of the home inspection which has been sent. Will that help the next buyer? Probably not. However, I do suspect the word will somehow spread in the realtor community that the property comes with big, flashing, caution lights.

Good news for us...we made an offer on our "back-up" house. Great lot, same area, fully rennovated, much smaller but now with a much smaller price tag that will enable us to build an addition. Due to a relocation, the sellers are very motivated. After six months on the market, they've seen the light and cut the price by 25%. We jumped. It'll be a great home if it all works out. It's been three years since we sold our last home so we're ready.

    Bookmark   February 13, 2009 at 9:34AM
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"You will. It is just a matter of time."

Just settled on one with K&T and no one blinked an eye.

Insurance is governed by state law and in Virginia the State Insurance Commission.

Not insuring any older home will not go over well here since there are still numerous houses dating back to the colonial period.

    Bookmark   February 13, 2009 at 4:29PM
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brickeyee: "Just settled on one with K&T and no one blinked an eye."

You are I is a matter of time.

In NJ, insurance is also governed by state law....over sight by the Banking and Insurance Commission...and too many to count old homes....many in the area of 200 -300 years old.

None of this makes a difference.....
....Unless your state has specific language in law that states that an insurance company can not refuse coverage or charge an exorbitant price to insure a home with live K&T.

Does VA have such a law or regulation of any sort?

If so, how is it worded? A link would be helpful.

That said, below is just a minuscule amount of info on the issue...there are hundreds if not thousands more for those who are interested to take a few moments to do the research.

Bottom one should assume (based on someone elses experience or their own past experience) that K&T or aluminum wiring won't be an insurance problem.

The smart thing to do is to check and verify first...BEFORE signing on the dotted line.

    Bookmark   February 14, 2009 at 12:47PM
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Virginia can be down right nasty if insurance companies try to red line for things that still comply with the existing electrical code like K&T.

It is still listed in the NEC as an acceptable wiring method.

    Bookmark   February 14, 2009 at 2:27PM
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Great decision you made! I want to add one more point for others in your situation. A "decommissioned" oil tank needs to be certified as such. I switched over from oil to gas heat many years ago, and had the oil tank pumped out and left in the ground. Ten years later, when I decided to remodel and expand the house, the old tank was in the way of the new foundation, so I had to have it removed. When it came out of the ground, it had holes in it and was leaking oil. Fortunately, it was in clay and, after $500 of soil testing, it was certified that the oil had not migrated. I asked the tank removal company about why it still had oil in it, since I had had it pumped out. They said that the oil deliverers never fully pump tanks out because they don't want any of the gunk at the bottom of the tank, and usually leave about 50 gallons in the "empty" tank! If I had any contamination, it would have cost big bucks, and would have delayed my remodel for months, or killed it. Some people have "tank" insurance, which is not always available and is usually only for people with a current oil delivery account.

I have a friend who noticed a little seepage by his oil tank, and, when it was checked out, it was determined that he had an active leak that needed to be fixed. Bottom line: he had to move out of his house for 4 months while the $450,000 cleanup took place. He was lucky: after deliberating for a couple of months, his homeowners insurance company agreed to pay for it. And as for the comment that there is EPA money available to deal with residential oil tanks, that's simply not true. It may be that some state ecology departments may help in some way, but I wouldn't count on it. If you have a leak, you're probably in deep doodoo.

My advice: never buy a house with a "decommissioned" underground oil tank unless the seller can document that it meets local decommissioning standards. I would even suggest making a purchase offer contingent on removal of the tank by the seller and remediation of any contamination at his expense.

    Bookmark   February 14, 2009 at 4:11PM
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brickeyee: "It is still listed in the NEC as an acceptable wiring method."

Be that as it may, it does not seem to deter the practice.
That being the case, best bet is to check first...then decide.

    Bookmark   February 14, 2009 at 7:15PM
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