Closing on a Property with a Septic System: What Realtors Need to Know

Closing on a Property with a Septic System: What Realtors Need to Know

As a realtor, closing on a property with a septic system requires extra attention and expertise. Septic systems, unlike municipal sewage systems, demand careful consideration to ensure the deal proceeds smoothly for both buyers and sellers. Here’s a comprehensive guide on what you need to know when managing a closing on a property with a septic system.

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On average, septic tanks should be inspected and pumped every 3 to 5 years. Consult with a professional to determine the best schedule for your system.

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1. Schedule a Septic System Inspection Early

One of the most critical steps when dealing with a septic system is scheduling an inspection as early as possible in the transaction. In many states, a septic inspection is required as part of the property transfer process. A licensed professional should conduct the inspection to assess the system’s condition and compliance with local health codes. If the inspection reveals issues like leaks, blockages, or outdated equipment, it may affect negotiations and closing timelines.

Key Tip: Coordinate with a trusted septic inspector early in the process. Don’t wait until the last minute, as repairs or replacements can take time.

2. Review Inspection Reports Thoroughly

After the inspection, the next step is to carefully review the report. The condition of the septic system may impact the buyer's decision to proceed with the purchase or renegotiate terms. Some things to look for in the report include:

• Tank condition (e.g., cracks, leaks, capacity)
• Drain field functionality
• Signs of system failure (e.g., slow drainage, bad odors)
• Whether the system complies with current regulations

If the system needs repairs or replacement, determine who will bear the cost, and ensure this is factored into the contract. Be transparent with your clients about what the report findings mean and discuss the potential costs involved.

3. Understand Local Septic Regulations

Septic system regulations vary widely by state and county. Some regions require the seller to perform upgrades to bring the system up to code before the sale, while others may offer exemptions if the property isn’t changing hands within a family.

Additionally, some areas have environmental restrictions, limiting the type of systems that can be installed or even banning septic systems altogether in favor of alternative waste systems.

Key Tip: Ensure you’re up to speed on local laws regarding septic systems. Having this knowledge will streamline the process and prevent surprises that could delay the closing.

4. Verify Septic System Records

As part of due diligence, obtain the property’s septic records. This includes the system's age, maintenance history, and any previous repairs. If no records are available, this could be a red flag that the system has not been properly maintained. An older system that hasn't been serviced regularly may require expensive upgrades or repairs.

Ask the seller or local authorities for records, and if they aren't available, be prepared to negotiate on the potential cost of system repairs or replacement with the buyer.

5. Address System Failures Before Closing

If the inspection reveals a failing or malfunctioning septic system, it’s essential to address this before closing. Many mortgage lenders require that septic systems be in working order before financing the property, making it crucial to resolve any issues quickly.

Options for addressing failures include:

• Repairing the system: Minor issues like clogged lines or broken pipes can often be repaired at a relatively low cost.
• Replacing the system: For older or extensively damaged systems, full replacement may be necessary.
• Negotiating costs: Depending on the severity of the issue, either the seller or buyer may agree to cover the cost of repairs, or it could be factored into the final sale price.

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6. Recommend a Septic Maintenance Schedule to Buyers

Once the transaction is complete, it's a good idea to provide your buyers with information on maintaining their new septic system. Proper maintenance can extend the system’s life and prevent costly future repairs. Recommend the following to your clients:

• Regular Pumping: A septic tank should typically be pumped every 3-5 years, depending on the household size and tank capacity.
• Avoiding Certain Materials: Educate your clients on what should not go into the septic system, such as grease, oils, and non-biodegradable materials (e.g., wipes or feminine hygiene products).
• Annual Inspections: Even if pumping isn’t required, an annual inspection can catch potential problems early.

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7. Ensure Septic System Disclosure

In many regions, sellers are required by law to disclose the presence of a septic system and any known issues. As the realtor, it’s your responsibility to ensure all disclosures are made accurately to avoid potential legal complications down the line. Be thorough in confirming the system’s status and any relevant paperwork, and ensure your seller provides all necessary information upfront.

Conclusion

Closing on a property with a septic system requires diligence and careful coordination between the parties involved. By following these steps, you can ensure the process goes smoothly and that both buyer and seller are protected. Septic systems, when properly maintained, can last for decades, but being proactive about inspections, repairs, and local regulations is key to avoiding any hiccups at closing. As a realtor, your expertise in navigating these complexities will be invaluable to your clients.

Are you ready to help your clients close on a property with a septic system? Let National Onsite be your resource through the process.