Not just the fuel tanks. If there were in-ground hydraulic lifts in the service bays, there is very possibly contamination from leakage around them as well.

quote:

. 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.

My old independent mechanic shop in PDX years ago, was doing some remodeling of his 2 story garage. It was a vintage era construction and the city was all atwitter to encourage his deep commitment to historic design. This was just as the local EPA was getting up & running.

His building sat across a side street from one of the literally OLDEST gas stations in the county, now pretty much surrounded by miles of dense former satellite neighborhoods converted to urban businesses.

His well designed upgrade of the building was suddenly shut down with discover of a considerable oil/gas residue, traced to a line from across the street to the gas station...which was decades before detanked & made into some trendy sandwich/etc shop.

He was left with a huge clean up bill on a spill that wasn't his, as he never had been in the fuel storage business.

Despite top attorneys on his side, the last I saw him the local laws were on the verge of confiscating his stuff.

Getting into real estate that has previously been used for any toxic substance. Gas stations, on site dry cleaning l, photo development is not for amateurs. I’m a lender and we would never finance a site like that unless it’s can be proven beyond a shadow of a doubt it's clean and the local and maybe even state environmental agencies have all signed off on it. Former Gas and service stations can be a nightmare. A phase 2 is gonna start at a few thousand for soil samples but may be the cheapest insurance she will ever buy. IF it is all cleaned and the rent is free becuase it’s a gifted property, then I may be willing to endorse a restaurant startup. Best of luck to your friend.

quote:

it's a site that used to be a gas station from the mid-1950's through the 1970's.

Service stations are not my end of the business. However, due to the vintage you're most likely talking about single wall storage tanks, single wall piping, and LEADED gasoline. Therefore, I'm echoing previous posters encouragement to test, test, and test.

One of the smartest things I have seen in my 20+ years in oil & gas when buying an asset is a "discovery" period (e.g. 2 years). During the discovery period, the previous owners pays for all remediation discovered and afterward the new owner pays. This gets rid of stuff missed during inspection or seasonal (e.g. contamination surfaces during spring thaw). Not sure if it's practical in a person to person sale as the discovery process I've been part of were O&G company to O&G company asset sales.

I did some work for an oil company on a gas station clean-up program run by the government It was call the Leaking Underground Storage Tank Fund, or LUST Fund. Do you remember back in the late 80's when all the gas stations were being remodeled? That is what was driving it.

I have seen the extent of the pollution a leaking underground tank can cause. Depending on the geography and underground water table, it can extend hundreds of yard or more off site. If you own it you are responsible and clean-up can take years. Most of the sites they ripped out the tanks and excavated the soil until it was clean. Others with off site contamination required other measures. I would stay the hell away.

A great secondary benefit of staying away from the building might be staying away from the restaurant business too. It's a tough nut to crack. Lots of failures in that line of business.

Possibly the "Gifter" is washing their hands of the problem.

Does she want to run a restaurant or remediate an old gas station?

Not an expert in the matter, but she is getting a property for free. She MAY be able to redevelop or rebuild the existing structure, but she will never, never, never be able to sell it.

Being a gas station from that era, I would make the assumption that it IS contaminated. It is unlikely that any bank will make a loan as if they have to take back the property, they will never be able to sell it due to the cost of remediation.

First thing to ask, has a Phase I environmental assessment been performed, ever? Since it was a gas station, I would bet on further studies. It will cost, I will guess $10,000+ for these studies alone. If the tanks are still in the ground, they will have to come out. If the soil is contaminated, think $$$$ to clean that up.

How big is the lot? If it is big enough and on a corner, she may be able to find interest from another gas company that wants to establish in her town.

Are they widening the road(s) any time soon? If so, the state/county/feds may be taking a portion. A good appraisal could condemn the whole property and then it is someone else's problem.

I would gladly accept the property and try to flip it to a cash buyer who can deal with the issues. Depending on the carrying costs (taxes, insurance, etc.) while it is vacant.

When my brother bought the warehouse he had been leasing, the EPA made him pay to have the soil tested because it had once been an auto repair facility. The EPA lied about that, but he still had to pay for the testing anyway.

quote:

Originally posted by braillediver:
Possibly the "Gifter" is washing their hands of the problem.

Does she want to run a restaurant or remediate an old gas station?

This is what I think the "Gifter" is doing.

Make sure she has good, local legal advice with knowledge of environmental regulations and liability concerns.

It's been a long time since I messed around in environmental real property law, but as I recall, the law is structured to make the owner responsible for the cleanup. Not the polluter, not the EPA, or the state, or Superfund, or anything else. The owner at the time the contamination is discovered.

I might be wrong about this, but I would damn well make sure I was wrong from an expert before I would take title.

And if I did take title, I would take it in an entity, and not personally, and I would make sure that the title holding entity, was owned by another entity, probably set up in Delaware.

Your friend wants to be MILES away from the liability for this thing. There is a really good chance that the site is contaminated with gasoline, oil and antifreeze at a minimum, and it could be really bad.

I remember rural gas stations in my youth that were only paved right by the pumps and the rest of the lot was dirt or gravel. Some of them would pour the used motor oil on the dirt to keep the dust down and pack it into a dirt and oil pavement.

A property like this is not a place for the starry eyed amateur.

Agree with all advice suggesting run far and fast.

Leaking tanks and lines with gas in soil / groundwater is just the tip of the potential contaminant iceberg. Gas stations that old typically poured spend solvents out back (chlorinated degreasers, like TCE, are actually harder to remediate than fuels). PCBs from hydraulics are also a potential concern. Then there is the lead paint and asbestos clean up of the structure itself.

If your friend persists, suggest she start reading here: https://www.adeq.state.ar.us/regs/

look up property here to see if it is "in the system" already https://www.adeq.state.ar.us/r...s/facility_data.aspx

start by hiring a "Certified Environmental Professional" (make sure the individual is listed here: https://www.adeq.state.ar.us/h...s/certification.aspx)

Bring a checkbook with a five-figure balance, just to get started. Six to seven figure balance if remediation is required.

~$300 / cubic yard for soils excavated, removed off-site and back filled. ~$2500 - 7500 per monitoring well, and there will be lots. $250 - 1000 per soil and groundwater "sample" analyzed, plus cost to collect and interpret. Consultant will be ~$125 - 200 per hour.

Many, many thanks for the suggestions and recommendations. I'll be seeing my friend today and will try one more time to convince her of the importance of this issue.

On the restaurant side of things she is good. Her current eatery is thriving, which is why she's excited about the new-to-her property. Where she's at now is kind of small and is okay for the off-season, but when the tourist and fishing season starts, her place is slammed from opening until closing (she just does lunch). The new place (once it's renovated) will accommodate more customers and, most importantly, give her larger storage and kitchen space. Her husband is a chef turned fishing guide and has run successful restaurants in other cities, so between the two of them they are golden on the food side of things.

I wish my concern was baseless but, from what I've read in this thread, it does not appear to be so. I'll take the information here and will provide to her this afternoon. After that, if she's unwilling to listen, I'll just keep my fingers crossed for luck for her.

Thanks again, guys.

They will need to be VERY careful and hire an environmental company to do some boring to check for underground tanks which most likely have leaked and have contaminated the soil. Cleanup from this is NOT cheap and may kill the deal.

Are you certain someone is not trying to get a huge, expensive headache off their hands?

ETA: does your friend have any idea how backbreaking and expensive it is to own and run their own restaurant? Does she have any experience in this area? It's brutal and I wanted to do it when I was young but am glad I ran away from that whole industry.

IANAL, but I think ArtieS’s advice about an entity firewall if she does go ahead after doing the testing is a really good idea. It would really suck to be clear today and have the EPA discover some other pollutant and have the whole rodeo again some years down the road. I’d still do all the testing and get a clearance before accepting...

quote:

Originally posted by ShneaSIG:
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.

Yes, this.

And do it, even if it derails her plan. She won't be able to get a loan using the land as collateral, as the bank will insist on the study anyway. And a subsequent buyer, even if 20 years from now, will balk, because they will not want the potential contamination.

The bad news is that there could well be contamination. They didn't care one bit about leaky gas tanks in the time frame that this was a gas station.

quote:

Originally posted by ArtieS:
Make sure she has good, local legal advice with knowledge of environmental regulations and liability concerns.

It's been a long time since I messed around in environmental real property law, but as I recall, the law is structured to make the owner responsible for the cleanup. Not the polluter, not the EPA, or the state, or Superfund, or anything else. The owner at the time the contamination is discovered.

I might be wrong about this, but I would damn well make sure I was wrong from an expert before I would take title.

And if I did take title, I would take it in an entity, and not personally, and I would make sure that the title holding entity, was owned by another entity, probably set up in Delaware.

Your friend wants to be MILES away from the liability for this thing. There is a really good chance that the site is contaminated with gasoline, oil and antifreeze at a minimum, and it could be really bad.

I remember rural gas stations in my youth that were only paved right by the pumps and the rest of the lot was dirt or gravel. Some of them would pour the used motor oil on the dirt to keep the dust down and pack it into a dirt and oil pavement.

A property like this is not a place for the starry eyed amateur.

The environmental enforcement laws can come straight through your corporate veil with penalties to enforce a clean up. CERCLA and RECRA (and other, similar environmental laws) have some truly scary stuff in them.

quote:

Originally posted by slosig:
IANAL, but I think ArtieS’s advice about an entity firewall if she does go ahead after doing the testing is a really good idea. It would really suck to be clear today and have the EPA discover some other pollutant and have the whole rodeo again some years down the road. I’d still do all the testing and get a clearance before accepting...

While, generally, corporate veils are good rule to follow, they don't help when it comes to environmental enforcement and penalties by the EPA. They can just set your corporate form aside and come straight to LLC members, limited partners, or even shareholders and officers, depending on the entity and the circumstances.

quote:

Originally posted by roberth:

quote:

Originally posted by braillediver:
Possibly the "Gifter" is washing their hands of the problem.

Does she want to run a restaurant or remediate an old gas station?

This is what I think the "Gifter" is doing.

And, in some ways, being gifted the property may be worse - that may remove a common defense to EPA enforcement actions (the bona fide purchaser defense, for anyone who wants to read more).

^^^^^Listen to this man; he knows of what he speaks.

I had thought that there was a culpability requirement for piercing the corporate veil, but there may not be, and as ShneaSIG points out there are some really scary powers in the environmental laws.

Further to that, there are some really scary people in the EPA who will go after you and force you to prove them wrong. That is its own pain and expense. Even if you are right, you are still broke.