Although uncommon, there are some sellers who are unable to get Title V reports. This is pretty common with foreclosures, but there are other reasons. Regardless, every once in a while, property comes on the market where the buyer must perform a Title V prior to purchasing the property - and no one knows how that inspection will turn out.
Common Assumptions When Seller Doesn't Produce Title V
It's very common for buyers to assume that if the seller doesn't produce a Title V, it's because he knows it will fail the inspection, and then that is the reason for not having the inspection. Personally, I don't really think this is a good selling strategy, and most of my colleagues in the business don't either. So, although I'm sure it happens, it's probably not the majority of cases. There's usually some other reason for it. If it's an estate, maybe the heirs simply can't get the money to do it, or don't have a good way to co-ordinate the logistics. In the case of banks, they usually just don't bother - which is a huge mistake, and costs them thousands - but that's their prerogative. My guidelines are simple: Don't eliminate a property just because of this requirement. View the property and decide on it first, then take the next steps if it's a property that might work for you.
How a Buyer Should Approach Doing a Title V on a Prospective Property
Legwork! Off to the local Board of Health. You're looking for two pieces of information, but you may find others. 1) The install date of the current system. 2) The last time a Title V inspection was done. As an example, I recently did this work for a buyer and discovered that the system was only 11 years old, and had passed an inspection just 5 years ago. Now this doesn't mean that the system will pass this time around, but with life expectancies of modern systems well in to 30 years or more, this property has a great chance of passing inspection. If the information is not as positive - like a 50 year old system that hasn't passed since 1986 - well, it's gut-check time!
Risks of A Buyer Performing His Own Title V Inspection
The main risk, assuming you've drafted a contingency here, is that you'll be out the inspection money, which is 400-600 dollars. Not nothing, but since you typically stand to gain about 10,000 in equity, well worth the risk. Just make sure that you do have an out if the system fails the inspection, as you'll likely want a chance to re-negotiate. Remember, all Title V's are supposed to be public record, so paying for the report will necessitate a copy being delivered at the Board of Health.
Common Title V/Title 5 Questions
Q: Does a bank in a short sale have to get title 5?
A: No, they do not. In a short Sale, the seller still needs to provide the Title V, or the buyer may have to.
Q: Does a bank in a foreclosure have to get Title 5?
A: No, they do not. In a foreclosure, the bank doesn't usually get the Title V. The buyer is responsible, but if they pay cash, most towns will not require a clean Title V for a year.
Q: Can you buy a house in MA if Title V has failed?
A: Yes, you can. But you may not be able to get a mortgage for it.
Q: Can a bank sell a property without a working septic?
A: Yes, they can. But other banks will not lend on the property.
Q: What if my septic system fails and I don't have the money to fix it?
A: Some towns have programs to allow you to borrow the money, at low rates, to fix your system. This could be a way to borrow the money and then sell your home. Alternatively, you could have the buyer take on the responsibility of the new system, but this will be more costly than the system, as outlined above.
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