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Old 06-12-2012, 06:19 PM
 
Location: Ohio
37 posts, read 69,292 times
Reputation: 29

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Hello,

Hopefully someone can help me out here. I'm trying to purchase a home that is sold AS IS, septic needs replaced. The owners are from out of state and don't want to deal with it but they currently have tenants (meaning the county requires the septic to be tested and pass inspection before title can transfer). The septic isn't necessarily bad, but it's not up to county codes due to its age. It has to be replaced, no question about it. The price of the house is very reasonable. Even figuring in $25,000 for a septic (I've got quotes), it's still a more than fair price. My lender keeps telling me to take it a step at a time. We are still waiting on an appraisal to determine next steps. The lender seems unsure if the bank will loan on the house because the septic needs replaced. They keep telling me "if everything goes well, this will work out." My understanding is the bank may not loan on a house if it has a bad septic. I wanted to take the approach of offering more than the asking price to cover septic but was told you can't put the full price of a septic into escrow (it exceeds the maximum amount). The seller doesn't have the money up front to replace the septic and if I pay for it with my offer, they won't see the cash until close... but the house can't close with a bad septic. I can't even pay cash for the septic replacement now because at this point the house isn't in my name (because the title can't transfer to me with it having a bad septic). Anyone ran into something like this before? I know this is very confusing, but any advice or information would be greatly appreciated!
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Old 06-12-2012, 08:07 PM
 
2,767 posts, read 3,434,896 times
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I've heard of buyers putting their own money into a special account or bond dedicated to replacing the septic to get the sale through. Other than that, I cant see the sale completing.
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Old 06-12-2012, 08:13 PM
 
Location: North Beach, MD on the Chesapeake
16,844 posts, read 16,671,052 times
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Also, there are loan programs out there that allow for septic replacement/repairs in the mortgage. First thing though is to have an absolute, airtight number for the septic work.

Now, "isn't to current code" doesn't necessarily mean "needs replaced". It means that what's there doesn't meet current code but did when installed. Therefore it's likely grandfathered in until replacement is called for. You see that with electrical and plumbong codes all the time.
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Old 06-12-2012, 09:10 PM
 
21,763 posts, read 37,266,643 times
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Septic fields that are not compliant with local codes can and often do lead to major problems with local officials which are QUITE DIFFERENT than the often piddly little things that home inspectors cite as "not current code". The reason that septic systems are different is that a malfunctioning one does not just put one house at risk put potentially a whole town -- poor sanitation can lead to out breaks of dysentery other such diseases.

The procedure to get this fixed and the deal done likely will involve involve convincing the lender that such repairs are going to be worth doing.
Since it sounds like the OP does not yet have a firm number as to what really will be required by local authorities I would suggest starting with something official from whatever county department is responsible for setting standards. Then you need to talk to qualified septic contractors. The lender may be OK with having an escrow account established to ensure this work get done / paid for OR they prefer to have this whole mess set up in a 203k type loan.


.
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Old 06-12-2012, 09:45 PM
 
833 posts, read 715,300 times
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Quote:
Originally Posted by North Beach Person View Post
Also, there are loan programs out there that allow for septic replacement/repairs in the mortgage. First thing though is to have an absolute, airtight number for the septic work.

Now, "isn't to current code" doesn't necessarily mean "needs replaced". It means that what's there doesn't meet current code but did when installed. Therefore it's likely grandfathered in until replacement is called for. You see that with electrical and plumbong codes all the time.
In Minnesota, a septic system not up to code must be in compliance in order to transfer deed.

Surprised regulations are more lax in Caslifornia.
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Old 06-12-2012, 09:46 PM
 
833 posts, read 715,300 times
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The sale can go through if the seller gets a bid and places 1 1/2 the estimate in an escrow.
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Old 06-12-2012, 09:47 PM
 
833 posts, read 715,300 times
Reputation: 721
Quote:
Originally Posted by 399083453 View Post
I've heard of buyers putting their own money into a special account or bond dedicated to replacing the septic to get the sale through. Other than that, I cant see the sale completing.

Yes, I have heard of buyers doing that also.
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Old 06-13-2012, 11:26 AM
 
586 posts, read 1,069,651 times
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I wouldn't do it because the 25k can easily turn into 60k. Just my 2 cents.
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Old 06-13-2012, 05:12 PM
 
Location: Ohio
37 posts, read 69,292 times
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Quote:
Originally Posted by redwolf fan View Post
The sale can go through if the seller gets a bid and places 1 1/2 the estimate in an escrow.

Hopefully this is what will happen. Basically I agreed to a price with the assumption I am assuming the cost of the septic. Once 2-3 estimates are received I am hoping we can modify the offer to the price we agreed on + price of the septic replacement and the seller can escrow the money. I'm pretty confident the house will appraise for at least $30k more than the price we agreed on.
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Old 06-13-2012, 06:09 PM
 
833 posts, read 715,300 times
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Where in the world does it cost $30,000 for a septic?

I just sold my dairy farm to my son and had to put in a new septic.

Minnesota is heavily regulated regarding septic laws.( also, construction costs are not cheap in Minnesota)

I had to go with the most expensive septic ( mound system) based on perc tests.

Total cost was $12,000 and most folks stated they never heard of a system that expensive.
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