Can you sell a house in NJ with a "failed" septic system?

Asked by Magichat9, Clifton, NJ Sun Jul 26, 2009

We are under contract on a short sale house. We had a house inspection and a septic inspection and the septic failed. What can we expect to happen now? Our lawyer has the report and is waiting to hear back from the seller's lawyer. Our 10 days is almost up as well.

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Lyle Wolf, Agent, Morristown, NJ
Wed Jul 13, 2011
You can, if the buyer uses an FHA 203K mortgage which can include the cost of repairs and updating (like a new septic system) in their mortgage. If you want more information on FHA 203k financing call me at 973-563-9722 or email me..
1 vote
ATS Enviro, , New Jersey
Mon Jul 27, 2009
First of all, they need to understand if the system is actually “failed” by the State standard – meaning that it is breaking ground/discharging into public waters, backing up into the dwelling, leaking from the tank directly or leaking directly into the basement of the home. Or did it “Fail” by the inspection standard – meaning anything from the list above or something as simple as a broken baffle, a damaged d-box or a crushed pipe in the absorption area. Failure by the State standard, typically called a system malfunction, gives the Health Departments authority to force a repair of the system, legally if need be. Failure under inspection guidelines – typically call Unsatisfactory Condition – can require minor repairs to bring the system into its designed condition. With respect to selling the home, escrows are common for repairs in either case. There is no reason that a contract can’t be signed that delineates the responsibility for the repairs at any level. The bigger issue usually arises from the home owners insurance companies requiring a letter of satisfactory operation of the onsite system before they will provide coverage.

So, first they need to figure out if it’s a health issue failure or a simple repair to bring the system back into compliance. Then they need to verify the requirements from their home owners insurance for coverage.
1 vote
Rick Ambrose, Other Pro, Sarasota, FL
Wed Jul 13, 2011
Yes you can, contingent that (1) sufficient funds are witheld in escrow with your attorney to redo the system and (2) you can get a COO (Certificate of Occupancy) from your local township that allows you to live in the home prior to the repair. Especially important in areas of the country where weather may prevent a new septic from being installed until spring or summer!
0 votes
Thomas Drozd, , Sparta, NJ
Wed Sep 30, 2009
A typical question for the area you are buying in. Septic system failures are a common negotiating ground on many purchase contracts. Depending on the seriousness of the nature of the septic system failure typically a provision is added to the contract that makes the seller responsible for fixing the problem. Even after you move in, the sytem can be fixed as long as the seller has put money into escrow with your lawyer. It happened to us three years ago and I supervised the fix the month after we moved in. If your 10 days is almost up and the seller has not returned an answer then you have the right to back out of the sale alltogether.
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