What Should You Know Before Buying a Home With an Oil Tank or Knob-and-Tube Wiring in Portland?
Portland’s older homes have good bones. They usually have systems that today’s builders don’t use, like oil tanks in the ground and knob-and-tube electrical wiring. You don’t need to walk away from a house just because you find either one of these features. But you do need more thorough documentation, inspection services, estimates, and time before your inspection contingency expires.
In this article, we will take a closer look at what prospective buyers should know before purchasing a home with an oil tank or knob-and-tube wiring when relocating to Portland, OR.
Why Would an Older Portland House Have This Equipment?
Portland’s older houses were built before modern heating and electrical codes. Many were heated with oil that was stored in a tank below ground until the system was replaced with gas or electric heat. Some still have knob-and-tube electrical wiring, either in active use or alongside more modern wiring. The issue isn’t necessarily the age of the equipment. The buyer needs to know the condition of the system, the quality of any past work, and the documentation.
Oil Tank: The Danger of Deteriorating Contents
A tank that’s under a house can corrode and leak the heating oil into the ground. Even if the tank is out of service, a purchaser needs to research if the oil was removed, the tank was emptied and decommissioned, and if there were any reports of leaks. The Oregon DEQ maintains a Heating Oil Tank Program, which allows for DEQ-licensed service contractors to provide a certification of qualifications to decommission a tank and for DEQ to register that the work has been done. Online records may not reflect all the work prior to registration starting in March 2000.
How Can a Buyer Investigate an Oil Tank?
The buyer should research the seller’s disclosure and any invoices, soil reports, maps, or documentation about the tank’s removal or decommissioning. Oregon law requires a statutory disclosure form that covers the presence of an oil tank, underground storage tanks, and contamination in the soil. The form also asks about past treatments or remediation of contaminated soil or tanks based on the seller’s knowledge.
If files aren’t available, the buyer may want to spend the money on a locating scan of the tank and an environmental contractor to evaluate the site’s condition. If the tank is decommissioned under Oregon statutes, the contractor would clean the tank, remove it or fill it with approved materials, and conduct a site assessment, including soil sampling as needed. If contamination exceeds the state’s standards, the cleanup takes on a different scope.
What Is This Knob-and-Tube Wiring in a Portland House?
Knob-and-tube wiring used ceramic knobs and tubes to connect electrical conductors and allow for airflow between them. There’s a reason why this type of electrical system has been banned since the 1950s and why older Portland houses may still have it: It can be a fire hazard if it has been altered, has had its insulation damaged, or has splices in the conductor wires. The presence of knob-and-tube wiring doesn’t always mean a house is unsafe. It depends on the condition and extent of the wiring, any modifications to it, and its load capacity. But it can be a problem if it has been altered without permits or if it is covered by insulation, drywall, or other materials where it cannot be seen.
“An oil tank or knob-and-tube wiring does not automatically make an older Portland home a bad purchase. What matters is knowing exactly what is present, reviewing the available records, bringing in the right specialists, and understanding the potential cost before your inspection period ends.”–Dave Van Nus, Oregon Real Estate Principal Broker
What Kind of Inspection Are We Talking About for Portland Home Buyers?
A general inspection will pick up on the presence of knob-and-tube wiring, but a buyer should have it assessed by a licensed electrician to determine what circuits are live, what modifications may have been made, and what the condition and capacity are. An inspection of the electrical panel and its overcurrent protection can also help determine the extent of rewiring, repair, or replacement that would be necessary.
Wiring insulation is equally important. Oregon’s electrical regulations have restrictions and requirements for insulating existing knob-and-tube wiring, including inspection and repair of the wiring, and a prohibition against using foamed-in-place insulation with knob-and-tube. Portland’s energy upgrade guidelines also recommend that knob-and-tube wiring be repaired by a licensed electrical contractor prior to installing any insulation in the house.
Insurance, Financing and Renovation Costs
Insurers may deny knob-and-tube coverage or require its removal after the sale is completed. Insurance issues may also be a concern with oil tanks. The buyer should consult with the lender and the insurance carrier during the inspection period, not after the inspection contingency has expired. The insurance company’s answer will vary based on the property’s location, the findings of the inspection, and the electrical report.
Can These Contingencies Be Negotiated During a Portland House Purchase?
Depending on the terms of the purchase agreement, the findings can allow the buyer to ask for repairs, a credit toward the costs, or a renegotiation of the sale price, or the opportunity to terminate the agreement based on the discovery under an applicable contingency. The simplest resolution depends on the scope of the work, the requirements of the lender and the insurance company, and the buyer’s cash position upon closing.
The most important thing is to get the repair estimates in writing before trying to negotiate the purchase price. A simple electrical repair is vastly different from a full rewiring job in the scope and cost. That’s the same difference between a clean tank that’s ready to be taken out and a contaminated one that requires extensive environmental remediation.
What Should a Portland Homebuyer Know About Older Houses?
Oil tanks and knob-and-tube wiring require more care and thorough inspection during a Portland house purchase, but either one can be a deal-breaker depending on the circumstances of the sale. An old tank that’s been cleaned and inspected or wiring that has been assessed by a qualified electrician can be negotiable items. If the tank’s documentation is incomplete or the wiring contains extensive damage or alterations, the problem could be much more involved than the buyer anticipated. The buyer should consult with a Portland real estate agent, qualified inspectors, a licensed electrician, environmental contractor, lender, and insurance carrier before proceeding with the purchase. Reach out to the professionals at Keller Williams Realty if you are interested in relocating to an older Portland, OR home with oil tanks or knob-and-tube wiring today.
What Are Portland Home Buyers Asking About Oil Tanks and Knob-and-Tube Wiring?
Q: Should I walk away from every Portland house that has an underground oil tank?
A: No. It depends on the condition of the tank, whether it’s still in service, and whether or not it has been inspected for leaks. The buyer will want access to any documents that might indicate its status and the history of any leaks. If those aren’t available, the buyer should spend the money to determine what’s under the house before removing an inspection contingency.
Q: Does knob-and-tube wiring need to be completely replaced in a house before the sale is finalized?
A: The extent of the replacement needed depends on several factors, including the condition of the existing wiring, the amount of rewiring that would be necessary, the buyer’s insurer and lender, and the regulations in the city where the house is located. A licensed electrician should evaluate the system and provide an estimate for repairs and replacements. Ideally, the buyer should get the insurance company’s approval on the property for the electrical system to be in place before assuming responsibility for it.
Q: Who pays for the tank removal and electrical rewiring in a house purchase?
A: The responsibility and payment for the tank and rewiring depend on the negotiations between the buyer and the seller in light of any financing and insurance requirements. The parties could agree to any of the following: that the seller will make the repairs, that the seller will reduce the sale price by the cost of the repairs, that the repair costs will come out of the proceeds of the loan, or that the buyer will accept the property in its current condition. This may depend on the terms of the loan agreement, so any proposed agreement should also be reviewed by the lender and the insurance company.
Q: Can a general home inspection confirm the safety of these systems?
A: A buyer should start with a general inspection, but it’s unlikely to be sufficient to investigate the condition of an oil tank or knob-and-tube wiring in a Portland house, both of which require more specialized knowledge. An electrician can identify live circuits and the condition of the wiring, and a qualified oil-tank contractor can locate the tank and identify any issues with it. A general inspection is useful to identify concerns a buyer may have with a property, but the buyer should also consult with the specialists to address those concerns before removing an inspection contingency.