By Henry Lane, Attorney
Lane & Hamer PC, Whitinsville, MA
In 1995, the Department of Environmental Protection adopted extensive revisions to Title V of the State Environmental Code. Title V regulates the construction and operation of subsurface sewerage disposal systems which are often referred to simply as septic systems. The changes adopted in 1995 established more stringent engineering standards for newly constructed septic systems and also introduced a new requirement for the inspection of systems serving homes and businesses that were being sold. Under the new regulations whenever a home or business served by a septic system is being sold the system must be inspected by an engineer or licensed subsurface sewage disposal system inspector. The regulations established a program for licensing inspectors and also established criteria for system inspections.
The inspection system was established for the purpose of protecting groundwater from contamination by the effluent from failed systems but the inspection criteria are substantially less demanding than requirements for a new system. More importantly, the inspection criteria do not include testing to determine whether or not the system is adequate to handle any anticipated demand. Once a system has been inspected, a report is prepared and the inspector indicates whether the system passes or fails. The report is filed with the local board of health which reviews the results and follows up to ensure that failed systems are repaired. A copy of the report is also generally provided to each prospective purchaser and often to the financial institution financing the purchase. If the report indicates that the system has failed the purchaser and or the financial institution financing the purchase will generally require that the system be repaired prior to closing or that sufficient funds are placed in escrow to cover the cost of repairs after the closing.
Although the Title V inspection system was established for the sole purpose of ensuring that failed septic systems were not directly contaminating groundwater, in common practice it has become a substitute for a more thorough inspection by prospective purchasers. Typically homebuyers will arrange for a home inspection before entering into a purchase and sale agreement, but will not have the septic system independently inspected, relying instead on the Title V inspection. Furthermore, homebuyers do not inquire about any problems with the system or consider how use of the system may change when they move into the home.
It is not unusual for an old system to be marginally functional and pass a Title V inspection but be totally inadequate for use by new owners. For example an elderly couple or single person may find an existing septic system to be adequate for the limited amount of effluent they generate, but the new family with three teenage children may find the same system totally inadequate to handle two loads of wash and eight showers every day. So it is not unusual for a purchaser to find that although the septic system serving their new home passed a Title V inspection, it fails shortly after closing and needs to be replaced. The bad news is that not only is the new owner faced with an expense that could range up to $30,000 but there is no recourse against anyone else.
Despite what one might think, the new owner does typically not have a claim against the inspector, because the inspector is only responsible for determining whether or not this system met any failure criteria on the day of the inspection. The inspector does not warrant or represent that the system will continue to function or will be adequate for any future use. Furthermore the inspector is typically hired by the seller so the inspector does not have a contractual relationship with the buyer which would support a legal claim. Similarly the new owner also does not have a claim against the seller unless the seller has made specific misrepresentations about the adequacy or operation of the system. In many transactions today the buyer may never even meet the seller and even if the buyer and seller do meet, the standard purchase and sale agreements in common use expressly provide that the seller is making no particular representations about the condition of the property and that the buyer is relying on their own inspections with regard to the condition of the property. That leaves only the brokers who also are generally protected from liability unless they have actual knowledge of a defect or deficiency in the system.
One might suggest that brokers could be more diligent in explaining the inadequacy of a Title V report and recommend that the purchaser obtain a more thorough inspection of subsurface sewage disposal systems. In practice, we suspect that many brokers are happy to allow a Title V inspection report to substitute for a more thorough inspection in order to avoid adding even more complication to an already overly complicated closing process. In short, subsurface sewage disposal systems are one more example of a situation in which the buyer must beware.
- Wednesday, 18 April 2012
- Posted in Categories: : The Law and You