When the Septic Hits the Fan

By Lisa Scoble posted 09-05-2018 11:59 AM


AdobeStock_125176108_wkg.jpgWhen the Septic Hits the Fan
Verifying Property Disclosure Statements

If you are relying on a seller’s property disclosure statement and the MLS to market your properties to potential buyers, you may need to dig a little deeper and flush out more details. Verifying key features of a property will go a long way to help protect you from possible claims. Plus, it can pump up your credibility with potential clients. No one wants to buy sight unseen, so your first task should be a trip to the property. It’s okay. You can bring a friend.

Here’s a case study highlighting mistaken assumptions and the issues that arose as a result.
A real estate agent obtained a listing of a three-bedroom home and requested a standard property disclosure statement. The seller completed the form indicating the home was connected to the public sewer system, which was working properly. The property was eventually sold, but upon an official home inspection, the buyer was told the wastewater system was, in fact, a septic system and needed to be replaced.
The wastewater system was never verified in person, nor was it checked for proper operation. In addition, the MLS was incorrect.
The agent advertised the property assuming the wastewater system was in working order and connected to the public sewer system.
Soon after the buyer took possession of the property, the septic system malfunctioned and, once inspected, it was determined that the property was not connected to the public sewer system and the septic system needed to be replaced. The buyer then sued the seller, and the agent, alleging false advertising, while seeking the cost to hook up to the public sewer system. The buyer also claimed diminished property value due to the septic system.
Brokers and agents must be alert to the type of wastewater system disclosed, in addition to bedroom and occupancy limits, which can indicate overall capacity of the system. Information on septic capacity or occupancy limits can usually be obtained in public records. In addition, the MLS is not a guarantee of home features. It is always a good idea to suggest a home inspection and document your recommendations. Intentional or negligent misrepresentation of the type of wastewater system or the occupancy limits on a property served by a septic system can violate license law and will likely result in civil litigation and disciplinary action by the real estate commission.

Operating smart means gathering the information you and your clients need up front to prevent any misconceptions or misinformation that could back up the deal. It’s always good to know what you’re wading into before you get caught up a creek!

This article was produced in conjunction with XL Catlin and is not to be taken as legal advice.