Purchasers of real estate, whether commercial, industrial, or residential, understand that they must conduct a due diligence investigation before title transfers. This is so because generally, purchasers become liable for any environmental violations and other kinds of violation when they take title. One buys the property and all of its flaws.

One major concern during a due diligence investigation concerns the integrity of underground storage tanks. Since underground storage tanks are buried, underground, and therefore not readily visible, experts are required to evaluate whether the tanks are leaking and otherwise meet current legal requirements. Underground storage tanks have historically been the source of many environmental problems -- because leaks can affect ground water quality. Generally, regulators become most concerned when drinking water is at risk of becoming contaminated.

In this regard, a recent EPA surprise inspection has yielded some alarming news. Nationwide, over a third of the existing underground tanks are not in compliance with federal law.

In New Jersey, nearly half the facilities (26 out of 54) checked were in violation of the government requirements. In New York, 39% (68 out of 173) failed.

While many of the inspected facilities were privately owned, some were owned by federal, state or local government agencies. EPA took enforcement actions against the noncompliant property owners, who are expected to install release detection monitoring systems and maintain records in accordance with state and federal requirements. In 1988, all regulated underground tanks will have to meet even more stringent regulatory standards or be properly closed.

Proper closure is viewed by many as soundest option. Closure eliminates the risk of future, potentially costly releases. Depending on tank size, closure often requires submission of a closure plan to the local regulatory agency and implementation of that plan following approval. Any contamination encountered during the tank removal must be addressed in a manner consistent with the approved plan and applicable law.

Certainly, not all underground storage tanks leak and the mere existence of one should not kill a real estate transaction. But knowledge that a tank either now exists, or once existed, must be viewed as a red flag. This is especially so in light of this recent news from the EPA that over third of the tanks fail current standards.

The information provided in this column is written by Stuart Lieberman,a practicing environmental attorney, and is for general information purposes only. It is not legal advice and should not be used in place of legal advice.

Stuart Lieberman, Esq., and IRED.Com, Inc., will not accept any responsibilty for any reliance on the information in this column or any damages whatsoever resulting from reading this column.