From Ownership to Fuel Transfers – Navigating Propane in Real Estate Deals
When buying or selling a home with a propane system, there are important steps both buyers and sellers must take to ensure a smooth transfer of ownership. Too often, propane is overlooked as a utility service, which can lead to unexpected costs, confusion, and even last-minute disputes during escrow.
Who Owns the Propane Tank? Buyer & Seller Must Verify
One of the most critical factors in a home sale involving propane is determining whether the tank is owned by the home seller or owned by the propane provider.
- If the tank is owned by the home seller, it is part of the real estate transaction and can transfer with the sale.
- If the tank is owned by the propane provider, the tank does not automatically transfer to the new owner—this must be disclosed and agreed upon during the sale.
HINT: Look for a propane provider decal on the tank!
We’ve seen multiple cases where buyers weren’t informed the propane tank was owned by a the propane provider, resulting in the seller or listing agent having to pay for the tank outright—which can cost around $3,000 for a standard-size tank!
🚨 Listing Agents & Buyer’s Agents: Avoid This Mistake!
It is the responsibility of both the buyer and seller to ensure the Listing Agreement and SWPI (Septic Inspection, Well Inspection, Property Monument, and Propane Tank Allocation of Cost Addendum) forms are used correctly whenever propane is involved in a home sale.
Propane Fuel Transfer: Who Pays for the Propane Left in the Tank?
Another commonly overlooked issue in home sales is the remaining propane in the tank at the time of transfer. This is not typically included in the home price, and there are two common options:
- The seller can request a refund for the remaining fuel.
- The seller can choose to include the remaining propane as part of the sale.
This should be clearly outlined during escrow so there is no confusion. The Buyer’s Agent should use the SWPI form to document whether the seller is being reimbursed for the propane or gifting it to the buyer.
If this is not included in the agreement, it can cause confusion and frustration at closing!
Why Propane Must Be Disclosed During Escrow
Propane is an essential utility service, just like electricity or water, and should never be an afterthought in a home sale.
- Sellers should disclose tank ownership and fuel transfer details early in the process.
- Buyers should ensure propane is part of their utility transfer checklist.
- Listing Agents and Buyer’s Agents must ensure the SWPI form is completed correctly to prevent surprises.
By addressing propane before closing, all parties can ensure a clear and fair agreement—saving time, money, and potential frustration.
Are you buying or selling a home with propane? Contact your local office with any questions—we’re happy to help make the process easier!