Re: Underground Oil Tank found on Property - Posted by MoniqueUSA
Posted by MoniqueUSA on December 02, 2003 at 13:24:15:
IB,
I suggest you take Nate’s very good recommendation, and add one more step.
Have the seller deed the property to a Land Trust now, and get the deed out of her name.
Have her assign the Beneficial Interest to your LLC with the Assignment held in escrow by your closing attorney. This minimizes the risk of:
the seller changing her mind after you’ve spent the $2K+ on clean-up
the seller deciding to sell to someone else
judgments or liens on the seller attaching to the property during the clean up and certification process (especially if it will be lengthy)
Just to be very clear on your intentions, have the seller sign an Escrow Acknowledgment – something that says she understands that she will remain the beneficial owner of the Trust until after the clean up is certified. Once certified as clean, the Assignment will be released from escrow and made a fully executed document. Should you not be able to get a clean thumbs up, the attorney’s escrow instructions are to cancel the Assignment and she shall remain the beneficial owner with no further recourse to you.
I’m not an attorney, nor have I ever played one on TV.
Get counsel from your attorney on how to do this and write up the Escrow Acknowledgment.
I like Nate’s suggestion of the single asset LLC as taking title, over my suggestion of the Land Trust… That wold definitely be the preferred method of accepting title and that way your investors are insulated as well. When the coast is clear, environmentally, then you can transfer whatever interest you wish to the investors, after the risk has been determined.
The Land Trust should do this for you… provide you the necessary cover while the evironmental determination is being reached.
Even if you forward the funds to stop the foreclosure, transfer to a Land Trust, and then not transfer the beneifical interest until you get the go ahead on the environmental matter.
Worst case here is that you will have spent a little money to cure the default and pay for the tank removal, and if anything goes wrong then you have simply transferred her title into a LT, that she reamins the Beneficial Interest, and you escape the ultimate financial liability… just in case something goes aray… Far better to risk 5K than an unlimited amount of exposure, if it turned out that way.
Posted by Frank Chin on December 03, 2003 at 07:49:51:
IB:
Seems my UST research showed that residential UST’s, used for holding heaing oil are exempt from Federal Law. Refer to the EPA publication (and the section under exceeptions), in this link:
You mentioned there was a 2 family there at one time, so I think the tank probably held residential heating oil.
According to the EPA chart, NJ laws are not in compliance with Federal laws, so both Federal and State (NJ) laws apply, and you’ll have to check your state regulations, and see if exceptions apply there as well.
In NYC, I have to conform to local codes for tank removal, in additon to state regs.
Re: LLC… or a Land Trust w/LLC - Posted by MoniqueUSA
Posted by MoniqueUSA on December 02, 2003 at 23:18:13:
Your point is a good one, no real protection from a prying attorney against a large claim.
The key benefit of the Land Trust in this case is to get the deed out of the seller’s name during the clean up process, yet not have the deed go into the LLC’s name in case there isn’t a clean thumbs up after removing the tank.
Wouldn’t the ultimate protection here be to transfer the property into the Trust, then have your single asset LLC take beneficial interest? Best of both worlds, no?
You could even get really paranoid, and set up a corporation to hold the LLC, which then holds beneficial interest of the Trust.