A friend of mine is through the roof excited about some property she is about to be gifted for a restaurant she will own and run. Unfortunately it's a site that used to be a gas station from the mid-1950's through the 1970's. After it closed as a gas station it became a number of short-lived businesses and has been unoccupied and deteriorating for the last decade.

My friend knows what it will take and what needs doing to get the building up to code for her restaurant, but when I asked her about if the site had underground storage tanks for the gasoline, she gave me a blank look and said she didn't know. I cautioned her that she ought to look into whether the site had above ground or below ground fuel storage and what, if any, removal and remediation had been done - and that if things hadn't been done correctly, or at all, that whoever owns the property could be liable for significant costs and fines at some point.

Because my friend kept talking only about the building and not even acknowledging my caution to her, I know my words fell on deaf ears. My question to the forum is - if she does become interested in finding out if there is any liability associated with this site, where does my friend start to look and who should she begin to talk to? I'm worried that having a certified inspector look at the site in its present state would open a can of worms because the area is small town/rural, and I would be very surprised if anything had been done to the site in question to meet any Federal or State regulations since it was first built. Is there a person with a certain certification or title that she should look for to get an informal inspection where any discrepancies discovered would not get reported to allow for planning and preparation to get any issues corrected?

Or... am I making much ado about nothing and I should just let a sleeping dog lay?

What county and city?
Some are more stringent than others but Arkansas in general is lax.
Also, as you suspect, I bet the tanks are still there and jack squat has been done with them.

If accepted, I suspect that this will be the gift that keeps on giving. Wise to have professionals look at it before setting foot on the property. Had a client, years ago, inherited an old gas station site. Had a hell of a time getting rid of it. Don't know if you can avoid the EPA getting wind of it, just don't know.

There are companies that test for this. I almost purchased a property that was a former gas station, but was currently used as a multi family property. The tanks leaked and the soil was contaminated.

If she is going to take ownership, make sure she consults with an attorney. She may be able to own it in a fashion that would protect her down the road should any liability be incurred.

That will make it nearly impossible to finance, until it is known for sure what the environmental status is.

Banks view it as an unacceptable risk. You need to get an appropriate environmental survey/study/review before putting a penny in such a property.

Removing/remediating such a site may be no big deal, or ruinous.

Not only no, but hell, no!

I’ve seen people driven to bankruptcy by cleanup costs that they were assured would not befall them.

And then there are “Superfund” sites.

She needs to hire a company that does environmental testing and do a phase 2 test profile. Like they say, it is the gift that will continue giving. I almost bought an old chemical plant.... glad I didn't. Property is still testing hot 10 years later.

There's a reason You see gas stations sit abandoned for so long. They're INCREDIBLY expensive to rip down with all the permits and what not. We looked into it a year or so ago to build a car wash.... the remediation costs weren't nearly worth it.

There are environment inspection companies that can perform "phase 1" and "phase 2" type testing for the purposes of CERCLA and other environmental laws. She will want to have at least a "Phase 1" done before even considering it. The liability for owning contaminated property, regardless of who or what caused it, can be massive. And, if it's an old gas station, odds are that there is contamination.

I suppose it would be entirely too cynical of me to wonder if the reason she is being given this site is that when the music stops, whoever is left standing is going to be tagged for cleanup, amounts far in excess of any possible value.

Maybe somebody wants to get title out of their name, by any means possible.

I worry about stuff like that.

From the rear view mirror as she rapidly roars away.

Pass!

My opinion only.

Opening a restaurant does not seem like the best use of the property.

I think the whole thought process about liability is overblown. Especially in light of your last paragraph.

I mean, shit o dear. It could be a superfund site.

Yep it could.

And yes, young girls were getting screwed in the back seat's of chevy's behind it way back when to.

Just my opinion of course

quote:

Originally posted by JALLEN:
I suppose it would be entirely too cynical of me to wonder if the reason she is being given this site is that when the music stops, whoever is left standing is going to be tagged for cleanup, amounts far in excess of any possible value.

Maybe somebody wants to get title out of their name, by any means possible.

I worry about stuff like that.

Me too, and justifiably so.

In 1981 I bought a closed gas station on contract with owner financing at 8 3/4% (well below market rate)and rented it to a bbq joint. Great set up. my rent made my payment and the bbq stand was doing well. There were 3 or 4 tanks in the ground. No big deal.

In 1988 Indiana started requiring an annual license fee on each tank - not a back breaker but enough to do someting with - also there was a liability insurance policy that was going to be required. I knew that this was going to turn into a bad dream so I got advice from a friend who was in the gas station business. He gave me the name of the guy that knew how to officially close out tanks.

Seems like tanks were 2 five thousand gallon and then 2 one thousand gallon. The tanks were excavated and cut into 4 ft square pieces and loaded on a flatbed - no using them for culverts - there was a couple small electralisis holes but they were better than expected.

Once the tanks were gone a couple guys in haz mat space suits carrying wand sniffers got in the hole and ran the sniffers over the dirt. That gave a beep if soil was contaminated. Of course it was. My guy was good and new how much more to dig. I had 3 or 4 truckloads of dirt to go to the incenerator and then the site tested clean. Paperwork went to Indianapolis and a couple months later I received an official document saying my site was officially closed. Cost was $18,000 1988 dollars.

Something like this should be playing in her mind

IMO an inspect of the structure(s) would be a second consideration to getting an Environmental Level 2 assessment done of the soil given a gas station previously occupied the property. If the analysis came back 'hot' or contaminated, your friend could be saddled with thousands of dollars in cleanup costs.

FWIW, "Phase One" or "Level One" is literally just walking around and looking at whatever's visible on the surface. "Phase Two" or "Level Two" is the very minimum your friend needs.

Have the check done before the transfer occurs, and tell your friend to look into whether or not its possible to not accept ownership of it. If it is genuinely a gift, then she cannot be forced to accept it. Either way, HAVE THE CHECK DONE BY QUALIFIED PERSONNEL BEFORE IT HAPPENS. She doesn't want to just manage to get away with something, she wants to stave off a nightmare that can (no shit) last for years and force her into bankruptcy.

The EPA will force anyone who they can catch who has ever been an owner or tenant to pay the full costs of the remediation - and then go looking for all the other past owners and tenants in a bid to make them pay their share. All the costs and all of the liability are on whoever the EPA catches. Your friend doesn't want to be that person unless your friend is absolutely positive that she can handle the cleanup.

This ain't paranoia talkin', either. If this person is your friend DO NOT LET THE SLEEPING DOG LIE.

quote:

Originally posted by JALLEN:
That will make it nearly impossible to finance, until it is known for sure what the environmental status is.

Banks view it as an unacceptable risk. You need to get an appropriate environmental survey/study/review before putting a penny in such a property.

Removing/remediating such a site may be no big deal, or ruinous.

The gifting part is what makes me leary. I don't know what her relationship is with the current owners or what would motivate them to gift her the land.

Not to say this could be a positive but something about looking a gift horse in the mouth to make sure it's not actually a white elephant that will bankrupt her.

If she's serious about exploring it, have her pay for professionals to figure out what needs to be done, how much it will initially cost her, and how much it might actually cost her. She'll need at least the right engineering expertise and legal expertise to figure out whether she would be actually be on the hook for mitigation costs even if they could identify the previous company that caused any problems. But even before the first shovel is stuck in the ground to do exploratory stuff, get the lawyer involved. The risk is that whoever finds the stuff might be responsible for mitigating it. And sometimes, the mitigation is to cover it back up and leave it alone.

But, then again, down the road, there's the risk of people getting cancer after have eaten at her restaurant several times and then going after her because she knowingly built on top of a toxic site.

Heck. At this point, have her beat feet.

Once the can of worms is opened, she may well lose her restaurant appetite.

And might well be the best thing you could do for a friend.

^^^ The story I heard a few years ago is that something like 85% of all new restaurants fail. Imagine tossing EPA-mandated cleanup costs on top of that statistic and then trying to make the buisness fly.