Selling a House With an Oil Tank or Septic System in Ontario

Older and rural homes often come with things you cannot see: an oil tank buried in the yard or tucked in the basement, and a septic system instead of municipal sewers. Buyers worry about them because a failed tank or system can be costly and disruptive.

This article explains what sellers generally need to know about disclosure, permits and records, and what buyers, insurers and lenders tend to ask for. No rule I can point to requires a septic inspection or oil tank certificate at the time of sale, but requests for them are common, and having paperwork ready usually makes the sale smoother. Your own situation may differ, so get advice if there is any doubt about a tank or system on your property.

What you must disclose about hidden defects

A seller's duty to disclose latent defects comes from case law, not from TRESA. A latent defect is one that makes a property unfit for habitation, dangerous or potentially dangerous, and that is generally not apparent on reasonable inspection. This duty stays with the seller whether or not an agent is used.

Patent defects, which a buyer or inspector can detect through reasonable observation and inquiry, generally need not be disclosed under the idea of buyer beware. A seller who tries to conceal a defect may lose that protection, and a seller can be liable for a latent defect they did not know about if they were wilfully blind to it.

For tanks and septic systems, that means the safest approach is honesty about what you know. A leak, a past failure, a buried tank you suspect but have never checked, or a system that backs up are the kinds of facts worth raising with your lawyer before you list. Whether a specific problem is a latent defect depends on the facts.

If you have a seller's agent and the agent knows of a fact you must legally disclose, the agent must disclose it to every interested buyer and make every reasonable effort to get a written acknowledgement from each buyer who receives the disclosure.

Septic systems: permits, pumping and records

Most household septic systems need a permit before construction under the Building Code Act, typically issued by the local municipality or health unit. A provincial Environmental Compliance Approval is needed only for systems over 10,000 litres per day, combined systems over that capacity on a lot, or systems on a different lot from the building they serve.

Pumping matters too. Septage removed from a septic tank must be transported by a carrier with an approved waste management system and deposited at an approved site. Keep the receipts from pumping.

The province advises buyers to request approvals, operation and maintenance records and past inspection reports, and a buyer of a sewage works becomes responsible for all obligations associated with it on purchase. Expect your buyer to ask for exactly this paper.

• The building permit or approval for the system, if you have it.
• Pumping and maintenance receipts, with dates.
• Any past inspection reports.
• A sketch or description of where the tank and bed are located.
• Notes on any repairs, backups or wet areas in the yard.

Oil tanks: what buyers and insurers look for

Heating oil tanks are a common concern. Some homes still have an active tank, and some have an old buried tank left over from a past furnace. Insurers and lenders often ask about them, and buyers may make an offer conditional on an inspection or a tank report.

The documents that help depend on the situation. For an active tank, records of installation, servicing and any past leak or repair are useful. For an old or buried tank, records showing it was properly removed or decommissioned are what buyers typically look for. If you do not know whether a tank is buried on your property, say so honestly and consider asking a qualified contractor to check.

If a leak is suspected, talk to a lawyer and the appropriate authorities before you do anything else. Check current contact numbers directly rather than relying on a number remembered from elsewhere.

Inspections, access and conditions in the offer

Even without a legal requirement, buyers commonly ask to inspect. When an inspector, septic contractor or tank locator comes to the property, remember that access to a seller's property without the seller's agent present requires the seller's written consent. Access beyond what the seller expressly authorizes may be treated as trespassing. Spell out what the visitors may do, since digging or pumping may go beyond a normal viewing.

If you are selling without an agent, you are a self-represented party and are responsible for protecting your own interests. A buyer's agent dealing with you cannot advise you on price or terms. That makes it more important to have a lawyer review the offer, especially any condition about inspections.

What to do next

• Find your septic permit and pumping receipts, and the dates of any oil tank work.
• Walk the property and note anything suspicious, such as vent pipes, fill pipes or soft ground.
• Decide whether to arrange your own inspection before listing so surprises come early.
• Tell your agent and lawyer everything you know about past leaks or failures.
• Check what your insurer and the buyer's lender will want.
• Give written consent for inspections only on terms you understand.

Frequently asked questions