Our new neighbors bought their house without knowing it had a septic. The MLS listed it as having public sewer and they asked the listing agent directly, who told them it was public sewer, not septic. They got a mortgage on the house and of course got no septic certification or inspection. About 2 weeks after move in, problems with the septic erupted and they are now facing having to replace it. We are in a non-disclosure state when selling, but that IMO is openly fraudulent.
Besides the high cost of replacing the septic system and the cost of repairing the damage to the house that was done with the septic backing up, is there any potential for mortgage application fraud? My advice was to go to a lawyer and pursue the listing agent and seller, but it doesn’t sound as though they have an appetite for that.
Title insurance covers the title to the property - that the seller actually owns the property and that any liens against the property are settled before the sale. I don’t believe it would cover any misrepresentations about the details of the property, such as the presence or absence of particular amenities or features.
You could be right Peter but it would seem whether you are on Septic or public sewer would be on the title. Also if they had a home inspection that should have been gone through.
How do I know if I have a septic system?
One way to determine if your home has a septic system is to check your property records. The property deed, building permit and design plans for your home and property will likely contain information about the presence (or lack) of a septic system. In some cases, there may be visual signs you have a septic system. For example, for some septic systems a mound or small hill is created for the installation of the drainfield. Also, if you follow the plumbing outlet leaving your home, you might find an access riser (black or green disc) or probe for the top of the septic tank. It is usually about 10 feet away from the building.
If you have a septic system, you will see a $0.00 charge for wastewater or sewer services on your utility bill (or you will not receive a utility bill). Your home’s location also can help you figure out if you have a septic system. If you live in a rural area, there is a high likelihood your home is served by a septic system. You can also talk to your neighbors. If they all have septic systems, your home likely does too. In many cases, people with septic systems also have a private drinking water well instead of public water. If the water line into your home does not have a meter attached to it, that usually indicates you have a private well and not public utility water. You also may not receive a water bill for drinking water if you have a private well.
If you are still having trouble, contact your local permitting authority (i.e., local health or environmental department) for a list of local septic system professionals who can help you find your septic tank and drainfield. A septic system professional will walk your property and determine where the system and its components are located.*
Thank you both for your replies. Good to see there is still some life to the board!
Someone should have caught it for sure, but here septic is a different inspection than home inspection. The seller used one of those discount brokers that sit on their hands, sell at the lowest price possible and take “only” 1% of the sales price for doing absolutely nothing.
I guess the closing company/lawyer didn’t catch it because sewer is assessed as a part of your water bill, being charged relative to how many gallons of water used. There would have been no proration to be done.
I am wondering about the ramifications of applying for a mortgage with erroneous information. Are they required to inform the mortgage company of the error and not only lack of septic certification but a failing system?
I can’t speak to everywhere, but in most of California, the title only describes the boundary of the property. Usually it’s map book, page, tract, lot (or something similar). Sometimes its “meets and bounds” - starting at this marker go north x feet then west y feet, and so on, hopefully describing a closed loop. Titles here don’t even talk about any building on the property, let alone a septic system.
It wouldn’t hurt to ask, of course, but I’m doubtful.
Of these, only the deed might be covered by title insurance. Building permits and design plans are typically kept at a city or county office, but they are not part of the title or deed to the property. There is almost certainly going to be a building permit for a septic system, so that’s the place to look.
When I bought my house, my agent went to the city and got copies of all of the building permits for the property and went over them with me. That was part of the service he provided. The buyer here would have been well-served to have done the same and looked for any concerns or issues.
But, as IP noted, super-discount brokers and little to no service. But that was the seller’s agent. What about the buyer’s agent?
Full service buyer’s agent, but frankly not convinced how good. In talking with the neighbors, they had no real clue what the comps were for their property. Must of never asked for comps to be run. I track the local real estate and happily they got a steal of a deal, even if they have to replace the septic. They had no idea of what the neighborhood had been selling for.
There are agents, and then there are agents. Educate yourself enough to get one that knows what they are doing. I have frankly never heard of an oops like this before. That listing agent needs to be sued. Unfortunately, the buyers agent will get smeared at the same time, which is probably why the buyers are leaning away from the idea.
Hopefully someone will chime in on the mortgage impact. Can their loan be called? Can they be sued for mortgage fraud?
One interesting thing I have had flagged by a title search was a contract with a fracking company that was 20 years old. It was a self-renewing contract and was still valid, even though no development was done in the area. We required the contract be closed out, which the frackers had no problem doing, but that property took about 6 months to close on.
Mostly a guess, but I don’t see what liability the borrowers have here to the mortgage company. The lender has the resources to do whatever inspections they deem necessary (and foist the cost off on the borrower because that is the way they operate these days). The borrowers aren’t the ones who said there was a sewer connection, it was the seller.
I doubt it. Certainly not in every state. My parents had septic for the first 40+ years of ownership, and then connected to the city sewer system. They didn’t have to change the title. And then sold the house a few years later.
There has to be more to this story as from someone in the mortgage business, does not make sense how this could be missed:
I am highly certain, all states require septic disclosure. So sellers would be in default of contract with listing city water & sewer and omitting disclosure of septic. And if septic listed, most (if not all) states require a satisfactory water pressure test and septic inspection.
Appraisal should have also alerted buyers to property being on well & septic. Have them check the appraisal.
Home Inspection should have also noted property being well & septic. And if buyers were present, they should have noticed storage/pressure tank in basement.
Wouldn’t the buyers see the well and/or septic lids poking out of the ground? I have well & septic and very noticeable from just walking the grounds.
Survey may also notate where well & septic tank lie on property. Not 100% sure on this but would think highly likely as one would want to not build over or near these items.
I bet there is more to this story than initially disclosed.
We recently sold a house with utility water and septic. We never knew we had a septic tank, as there was no lid poking out. Instead, there was a 25’ tree growing over it (from before we bought it). Dodged a bullet there.
While you are correct that it is astonishing the listing agent would be so cavalier as list a property without verifying public sewer, you would lose the bet that there is more to this story.
Public water, so no well poking up from the ground, and no storage/pressure tank, which I am assuming you are again talking about a well here. In our area septic inspections are separate from home inspections. Because the house has public water, sewer costs are billed monthly along with the water, and as such there is no sewer tax to prorate, as there would be if it was for a previous property we had with a well and public sewer.
We are in the same neighborhood and also have septic/public water. No septic lids poking out of the ground. Needs to be dug up every time it’s serviced/pumped/inspected.
We are a buyer beware state, no disclosure beyond that needed. That said, the property was misrepresented and I am sure they could sue. IMO they SHOULD sue. Not only is it misstated on the MLS to have public sewer, the selling agent directly asked the listing agent and was told public sewer, not septic.
I will say I had noted with surprise that the MLS listed this property as being on public sewer, but some of us do, some of us don’t, and they are across the lake from me so in a different part of the neighborhood, though our property lines touch under water.
If you don’t mind me asking, what state is that? I’m licensed to originate in all 50 states, and do a fair amount of business out of my home state and have never encountered that. While most of my biz was refinances, I’m very curious if this is in a state I’ve done business in…has to be a state like the Dakotas, Mississippi, Alabama or West Virginia.
I’ve bought 3 properties here, as well as 3 in PA. Made offers in NJ, WV, USVI, and GA. It is amazing how different the rules are from state to state.
The septic inspection at our rural VA property consisted of walking over the area where the septic field was, checking for softness. A bit funny, really, given property is on river bottoms and the vole/mole trails cause softness under your feet anyway! This was the property where the title insurance caught the presence of a fracking contract that was ongoing.
I have purchased homes with septic in Pennsylvania and Tennessee. (And with sewer in Boston, PA, and Chicago.) Neither had a “septic lid” poking out of the ground. In fact we just bought another home in Tennessee, and neither did it. When you want the septic services, they have to dig through the lawn (or garden, at the last home) to open it up.
At this home there is a well (which only serves the HVAC) and it is visible but not particularly noticeable. And there was no disclosure of same, either. The pressure tank is well hidden in the HVAC room, and was not mentioned in the (expensive) home inspection.
I don’t recall our home inspections mentioning septic, and if they did they certainly did not have a water pressure test or septic inspection. Indeed, I decided to get one myself after chatting with the prior owner (a friend) who mentioned she had never had it pumped in 30 years! We had it serviced, and the guy said it was working perfectly. Thank goodness.
For the home we sold a few years ago we disclosed that it was on septic, but only because we had it serviced a year earlier and thought it was a reasonable thing to mention as a selling point.
Did a couple of purchases for clients this past year in VA. Fairly certain there was a real property disclosure. Curiosity has me going so gonna pull up those deals to check out those disclosures: one was in Blacksburg and other I believe in Martinsville, VA.
You have the option to do a real disclosure, or simply present papers that essentially state Buyer Beware.
Although federal law requires some basic disclosures across the U.S., Virginia law does not require sellers to disclose much information about their property at all…The state of Virginia generally still goes by the old English common-law concept of “caveat emptor” (“let the buyer beware”). That basically means that while sellers can’t lie outright or actively conceal a problem—and must honestly answer prospective buyers’ questions when asked—they aren’t obligated to point out the home’s flaws or defects to buyers.Selling a Virginia Home: What Are My Disclosure Obligations? | Nolo.
So obviously, it was not properly answered when asked about a septic system, and as I suspected they have a case should they pursue it. My concern was more about what harm could come to the buyers from the mortgage co.