Home Buying in Beverly>Question Details

Holly, Home Buyer in Beverly, MA

HI, I have a question. I am currently in the process of purchasing a short sale home

Asked by Holly, Beverly, MA Wed Mar 25, 2009

HI, I have a question. I am currently in the process of purchasing a short sale home that has a failed septic.

I was told that a approved septic design must be in place before the closing for the bank.

I was also told that the current owners cannot sell their house with a failed septic.

The home is being sold "as is" with a failed septic inspection in the disclousure.

Any suggestions?

Help the community by answering this question:


You should consult your agent since they will know the details of the situation but the bottom line is the sellers will not be able to pay to fix the septic or else the bank will likely raise serious issue with them since they have already defaulted on their mortgage and therefore owe the bank money. The bank will definitely not pay for any issue found on the property (hence it being sold as is) ... Seems the only way to potentially remedy the situation is for you to pay to fix the septic on your own, prior to closing, which is a risky investment if you don't officially own the property yet. If you are trying to finance, you are right, a failed septic will be an issue because they will probably not loan you money of a house that does not pass the Title IV. Unfortunately you are learning one of the big downsides to short sale (and foreclosed) properties. They can be very complicated, and take a lot of time and energy only to find out the deal may not happen after-all. Again, consult your buyers agent or real estate attorney and see what advice they can offer based on all the details of your deal.

Good luck!
0 votes Thank Flag Link Thu Mar 26, 2009
That’s a tough one. Very unusual for Beverly. Do you know if there is public sewer at the street? If you are not willing to accept the cost of doing the upgrades (i.e. becoming Title V compliant, connect to public sewer, etc..) or your lender requires this to be done before lending, than you need to try and negotiate this with the bank. Banks are very hesitant to do work to a property they technically don’t own. They would much prefer to reduce the price an appropriate amount. Good luck.
Web Reference: http://www.inlinerealty.com
0 votes Thank Flag Link Wed Mar 25, 2009
There are work arounds, you'll need your attorney to draw up an acceptable compromise with the lender. Basically they hold back aprox 150% the estimated cost to do the repair work from the closing with an agreement that the work be done after closing in a timely fashion, after the work is done & approved by the local authorities etc. the remaining balance is returned to the lender from the short sale.

Either way they'll have to address this situation if the property is to sell, either now or in the future. The contract terms for something like this will need to be drawn up by an attorney.

Good luck
0 votes Thank Flag Link Wed Mar 25, 2009
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