Environmental Law

Real Property Damages after an Oil Spill

An oil spill damages or destroys practically everything in its path, from fish and wild life to personal property to real estate. If you're real property is damaged, you may be able to file a claim for money to pay for the damage.

Real Property

Real property damage under the Oil Pollution Act of 1990 (OPA) is when your land or building is damaged by an oil spill, or you suffer economic losses as result of the damage to your land or building. Individuals and businesses can file claims for land or buildings they own or lease, such as:

  • Your primary home or residence
  • Land or buildings used for your business, such as a building used to store fishing tackle or fresh fish catches
  • Vacation or rental property, such as a beachfront home
  • Vacant land you bought as an investment, such as a beachfront lot

Generally, a property owner like you has two options. You can file a claim for the:

  • Cost of cleaning and restoring your property to the condition it was in before the oil spill, such as removal of oil deposits and scrubbing or cleaning stained sand on your beachfront property
  • Difference between the property's assessed value and the value you sold it for. "Assessed value" is determined by the local assessor or auditor; it's what your property would have sold for under normal circumstances. You have to sell the property before you can file this type of claim

This claim is for damage to the property. Don't get it confused with a claim for loss of income from your business or rental property. You may be entitled to both claims. For example, you may be able to file a claim to cleanup and restore the sand and soil on your beachfront property and file a claim if renters or vacationers canceled their contracts to rent the property because of the oil spill.

Claims Process

There's a special claims process under the Oil Pollution Act of 1990 (OPA) for property damaged by an oil spill in US "navigable waters" - such as major rivers and coastal waters.

If the spill happened on land or on inland waters, like rivers or lakes, the US Environmental Protection Agency (EPA) is in charge of the spill and claims for damages. If the spill happened in US coastal waters, like the Gulf of Mexico, or deep sea areas under US control, the US Coast Guard is in charge.

Shortly after the 2010 oil spill in the Gulf of Mexico, British Petroleum (BP) created a claims process for damages to personal and real property, business losses, and other damages. In mid-June 2010, BP put $20 billion into an escrow fund and gave up control over deciding what claims to pay and how much to pay. Instead, an Independent Claims Facility handles all claims - but you should still use BP's forms and filing process.

When filing a claim for real property damage, you need to file a separate claim for each piece of property damaged by the spill. And, as a general rule, you have to file a claim within three years from the date you discovered, or reasonably should have discovered, the damage.

Proving a Claim

You have to show you're entitled to damages under the OPA, which means your claim has to include documents or other proof that:

  • You own or lease the damaged property
  • The damage was in fact caused by oil from the spill
  • The actual and precise dollar amount of the damage

There are all sorts of documents and other materials you can use to prove your claim, such as:

  • Deeds or lease agreements
  • Photographs of the damaged property
  • Bids or estimates of the cost to repair or clean the property, or receipts for what you paid if you've already had your land cleaned or repaired
  • Appraisals showing the value of the property before and after the damage
  • If you sold the property at a loss and you're claiming the difference between the pre-spill and sale values, you need to give proof of the values of similar properties in your area before and after the spill. Your real estate agent should be able to help find that information

How Much?

Much like if you filed a claim under your homeowner's insurance policy, an adjuster examines your claim and supporting documents and information to determine the amount of your loss. Claims for cleaning or restoring your property may be based on the bids, estimates, or receipts you submit with your claim. Also, adjusters have information and resources about typical, reasonable costs.

You should be able to get the loss in value after the sale so long as submit the proper proof of pre- and post-spill values of your property and similar properties in the area.

You can file an appeal if you think your claim was underpaid. A special three-judge panel will hear these cases. However, as of mid-June 2010, details about this appeals process aren't available yet. Also, it's unclear if claims paid before the $20 billion escrow account was created may be appealed.

Questions for Your Attorney

  • What can I do if I discover more damage to my home after I submitted a claim?
  • My ex-souse and I both own equal shares of beachfront property. Who should file a claim? Who gets paid? How can I make sure my ex-spouse uses the money to restore the property?
  • Do I have to tell potential buyers about oil damage to my property?
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