DISCLOSING SEPTIC OR SEWER

DISCLOSING SEPTIC OR SEWER

Listing Agent Liability.

Listing Agents and Sellers should be careful when disclosing whether a property is on “septic system” or “public sewer”.

I receive at least ten disputes every year where a buyer is threatening to sue the Listing Agent/Broker because the MLS states “public sewer” when he/she discovers after close that the property was actually on a “septic system”.

Simply put, Listing Agents generally don’t know whether a property is serviced by “public sewer” or “septic system.” If you state in the MLS “public sewer,” then make sure that you source who told you it was on “public sewer”.

If seller told you that the property was connected to “public sewer,” then put in private remarks:
“public sewer per seller, buyer to confirm:”
– If some public source indicates that the property was connected to “public sewer,” then state in private remarks:
“public sewer per public records, buyer to confirm:”
– If you reasonably believe that a property is connected to “public sewer,” but have no source, then state in private remarks:
“agent has not confirmed whether or not the property is connected to public sewer, buyer is advised to confirm:”
– If you really don’t know, then don’t select either option and leave it blank.

If you state “public sewer,” and fail to disclose the source for the opinion, then you could be liable to buyer for: (1) the cost to connect the property to “public sewer” or; (2) the cost to repair any defects with the “septic system” discovered by buyer after close.

In one case, the Listing Agent was asked to pay $52,000 as the cost to connect the property to “public sewer” when the agent’s MLS stated “public sewer” and buyer later discovered that the property was actually hooked-up to a defective “septic system”.

In another case, the Listing Agent was asked to pay $27,000 as the cost to replace an existing, defective “septic system” at a property where the Listing Agent’s MLS advertised “public sewer”.

The Listing Agent needs to exercise caution.

Seller Liability.

The seller also has liability for misleading a buyer to believe a property is connected to “public sewer.”

Both the Transfer Disclosure Statement and the Seller Property Questionnaire request that seller confirm whether the property is on “public sewer” or “septic system”.

Paragraph V(C) of the Seller Property Questionnaire asks:
ARE YOU SELLER AWARE OF . . .
1. Defects in any of the following (including past defects that have been repaired): heating, air conditioning, electrical, plumbing (including the presence of polybutylene pipes), water, sewer, waste disposal, or septic system, sump pumps, well, roof, gutters, chimney, fireplace, foundation, crawl space, attic, soil, grading, drainage, retaining walls, interior or exterior doors, windows, walls, ceilings, floors or appliances.
2. The leasing of any of the following on or serving the Property: solar system, water softener system, water purifier system, alarm system, or propane tank(s).
3. An alternative septic system on or serving the Property.
Paragraph IIA of the Transfer Disclosure Statement asks:

THE SUBJECT PROPERTY HAS THE ITEMS CHECKED BELOW:
n Public Sewer System

n Septic Tank.

The Listing Agent should ask the seller when listing the property whether the property is on “public sewer” or “septic system.” The Listing Agent should also advise seller of his/her/their obligation to disclose “public sewer” or “septic system” on the SPQ and TDS forms.

This is an important disclosure. Many properties located in unincorporated areas of Los Angeles, San Bernardino and Riverside Counties are on “septic systems.” Many properties within city boundaries are surprisingly on “septic systems”.

A property that is on a “septic system” is not necessarily a less desirable property, but simply needs to be disclosed in order to give buyers an opportunity to inspect it’s condition prior to removing contingencies.

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