The State of Vermont regulates propane service and those laws affect how propane gas is handled during a purchase and sale transaction. By being proactive and taking certain steps, both buyer and seller can mitigate any post transaction problems.
Who owns the propane tank?
Propane tanks are mostly owned by the propane dealers and not by the individual property owner. Often a property owner does not know the answer to who retains ownership and is surprised that they probably do not own the tank. Early in the transaction call the current propane dealer to notify them about the upcoming sale. Confirm who owns the tank (property owner or dealer), what size it is, and the date the closing will occur. Additionally, schedule the final reading in which the dealer comes to the property and takes a physical reading just prior to the closing date.
What happens to the remaining fuel at closing?
According to Vermont law, if the tank is owned by the dealer then it is the dealer’s responsibility to refund their customer for any remaining fuel that is in the tank on the day of closing. The dealer is not allowed to redirect the funds to other channels and cannot make a decision regarding who has the legal right to the product. The dealers must directly refund their current customers at “today’s market rate.” If the tank is privately held, the common strategy is for a fuel proration to be added to the closing documents showing a credit to the seller and debit to the buyer.
What if the buyer wants to switch companies?
If the tank is owned by the dealer but the new buyer would like to use a different company then arrange for a tank removal as soon as possible. The dealer is not allowed to charge for the removal of their tank as long as it has been on the property for more than 12 months. This includes underground tanks and regardless of tank size. Additionally, there shall be no charge for the termination of service. If the buyer would like to continue service with the current company then an account must be set up that starts the day of closing or else the buyer runs the risk of the dealer “locking out” their tank.
Shop around
Consumers are advised to shop around when selecting propane companies. Prices are not regulated and therefore can fluctuate wildly between companies. There is a wide variation in suppliers all with different pricing structures. Some are large multinational operations that have multiple locations throughout the state and some are small, one truck suppliers serving a small geographic area. Ask for fee disclosures and fuel buying programs in addition to pricing so that an accurate comparison can be made.
Whether this is your first real estate transaction or you are an experienced buyer or seller, Vermont can be different than most States regarding rules and regulations. By taking certain steps at the beginning of a transaction, the propane service should be an easy transfer and mitigate any post- transaction complications.
