Property Q&A in Plainville>Question Details

Emily Balents, Home Buyer in Sebastian, FL

what do you mean failed title?

Asked by Emily Balents, Sebastian, FL Tue Mar 23, 2010

please contact me

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Hello Emily,

The information posted below is not correct. A title 5 has nothing to do with a clear and marketable title. First off, let me start by explaining what “passed” Title 5 is. It is a certificate of compliance issued on private septic systems after the system has been tested by a licensed inspector and the test concludes that the system’s function meets the state and local guidelines. It is required when a property sale takes place in MA, although there are some exclusion's to the law.

Because it is a law in MA, lenders issuing new mortgages in MA require, that the certificate exists and passes (but again, there are some exclusion’s to this). If the title 5 certificate states that the system has failed, that doesn’t mean it’s the end of the road for financing. A lender typically requires that design plans for repairs and or a new system (whichever is required by state and local authorities) must be drawn up by an engineer and those design plans get approved by the local Board of Health. From there, a lender usually requires that the design plans get sent to 3 installers who provide 3 bids. The lender will use the middle bid as a guideline and require that 1.5 times that bid be held in an escrow account at closing and remain there until the work is completed….allowing the sale to go forward, while protecting their own interest. There is no law mandating who does the leg work or fronts the money, but traditionally it is the seller who does this. In today’s market, it is not uncommon for sellers to price their homes reflecting this cost and aggravation and have the buyer follow thru with it. I hope you find this helpful. Best of luck!

1 vote Thank Flag Link Tue Mar 23, 2010
It means the property cannot deliver a clear and marketable title, thus not allowing someone who is trying to purchase obtain a mortgage.
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0 votes Thank Flag Link Tue Mar 23, 2010
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