The Vault - Questions and Answers

DATE:	07/30/02
SUBJECT/TOPIC:	OWNERSHIP OF UST'S
	Q:	What type of instrument, if any, does an owner of underground gasoline tanks and pumps have to file before they are put on someone else's property (i.e., UCC-1 or fixture filing)? This is to say that the owner of the tanks and pumps do not sell the tanks and pumps but just place them in the ground to be used by the property owner. How is someone to know that the owner of the property is not the owner of the tanks? We had a foreclosure on a convenience store. The bank we represented had a blanket UCC on all inventory, fixtures, equipment, etc., as well as a trust deed on the real property. We conducted the foreclosure sale and the purchaser came to us several days later stating he had been contacted by someone who said they owned the gas tanks and pumps. We checked before the sale and after and have not found any document putting the world on notice of the gas tanks or pumps. We have not checked with Nashville. Any help is appreciated.
	A:	Thanks for your question. I don't think a UCC or fixture filing would be appropriate unless there is a loan and security interest. If the tanks and pumps are leased to the landowner one could do "true lease" filings though. I would have the landowner sign a waiver (similar to a landlord's waiver) stating that the tanks are owned by the client and record it. An easement agreement might also be something to consider. The key thing would be to have a purchaser or encumbrancer on notice of the client's rights. The exact document may not matter that much. I'd run a UCC-11 with the secretary of state, but if it is clean it seems to me if the purchaser wants the tanks and pumps he's got them. I can't imagine them not being considered part of the real estate vis a vis a b.f.p. Because of the liability that can be associated with tank ownership, however, the purchaser may want to be sure there are no problems with leaks, etc. before making a final decision.
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DATE:

07/30/02

SUBJECT/TOPIC:

OWNERSHIP OF UST'S

What type of instrument, if any, does an owner of underground gasoline tanks and pumps have to file before they are put on someone else's property (i.e., UCC-1 or fixture filing)? This is to say that the owner of the tanks and pumps do not sell the tanks and pumps but just place them in the ground to be used by the property owner. How is someone to know that the owner of the property is not the owner of the tanks?

We had a foreclosure on a convenience store. The bank we represented had a blanket UCC on all inventory, fixtures, equipment, etc., as well as a trust deed on the real property. We conducted the foreclosure sale and the purchaser came to us several days later stating he had been contacted by someone who said they owned the gas tanks and pumps. We checked before the sale and after and have not found any document putting the world on notice of the gas tanks or pumps. We have not checked with Nashville. Any help is appreciated.

Thanks for your question. I don't think a UCC or fixture filing would be appropriate unless there is a loan and security interest. If the tanks and pumps are leased to the landowner one could do "true lease" filings though. I would have the landowner sign a waiver (similar to a landlord's waiver) stating that the tanks are owned by the client and record it. An easement agreement might also be something to consider. The key thing would be to have a purchaser or encumbrancer on notice of the client's rights. The exact document may not matter that much. I'd run a UCC-11 with the secretary of state, but if it is clean it seems to me if the purchaser wants the tanks and pumps he's got them. I can't imagine them not being considered part of the real estate vis a vis a b.f.p. Because of the liability that can be associated with tank ownership, however, the purchaser may want to be sure there are no problems with leaks, etc. before making a final decision.

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