Appraiser Marked Private Septic And Well As Public

[david lloyd]

What are your damages? Your septic did not fail because you went FHA. So at most if they call it in you can get another loan and your damages will be the new closing costs. You do have to understand that FHA code on the septic has nothing to do with, if you have to replace the drainfield or tank etc. Even if a home inspecton said that your system was great, and breaks 5 months later, you can not do anything unless you can prove it that it was broken before the inspection. I feel sorry for your problems, but probably you had a copy of the appraisal before the closing and at that time you should of seen the appraiser's mistake.

 

[NJAPRAZE]

The appraiser on the property I purchased with an FHA loan marked my water and sewer as public therefore the required FHA tests and minimum distance requirements were not performed. The system has not only failed it will cost upwards of 60k to bring up to health and safety standards due to the size of the lot and having to move the well. The property does not qualify for a FHA loan due to the distance from the septic to the well as is being only 40ft. Any advice on who is liable?

min distance requirements are only required when there is both a well and septic onsite; appraiser reports what they can readily observe... you may want to check MLS offering etc -- was it originally reported correctly and was that what the appraiser relied upon? was it a typographical error - i.e. simply a case of the wrong box was checked?

Did the system fail AFTER PURCHASE after it was viewed/observed by the appraiser??? I believe this is the crux of it, right? And now you have a financial cost to remedy...

TBH -- i feel that your're looking to go after the appraiser or ANYONE else that you can now find fault with, now - after the transaction has closed, to recoup costs... and may be unjustly targeting the appraiser; appraiser's job is to estimate VALUE and report various conditions//observations etc (i.e. relative to FHA guidelines/requirements). Appraiser is not a system or construction expert.

DID YOU HAVE A HOME INSPECTION done? This is a more comprehensive inspection by more of a specialist to specifically determine if any system deficiencies etc are present and is typically required; if you did... the lender's UNDWR would have recv'd a copy a knew that both a WELL & SEPTIC were indeed present and called for revisions, clarifications, etc from the appraiser. What did your home inspector say about the systems??? Or, did you WAIVE having this done to make your bid more attractive [as some Buyers/realtors have done or suggested]?

Ultimately, it is the LENDER/UNDWR's responsibility to determine adequacy of collateral and it is likely them who you should likely pursue for negligence (if present) -- for the loan shouldn't have gone through if the collateral was inadequate and/or it was their responsibility to get remedied PRIOR to settlement (for which the Seller may have given you a credit, reduction in price or had to fully bare the cost themselves to do).

As part of the closing process -- you likely signed off on form HUD-92564-CN -> "For Your Protection: Get a Home Inspection"; additioanlly - you were likely provided a copy of the appraisal, closing docs, etc to review prior to closing; thus - now just may be a case of "let the buyer beware" --- but you should still consult an attorney as has been suggested.

Good luck to you and please keep us updated.

 

[Tru Red]

I vote....Best Post in a Long Time.

Me: 17 year appraiser and 30 year RE broker. My wife: 27 year property attorney.

We both enjoyed reading this today.

My wife notes based on comments in this thread that the buyer, seller, lender, home inspector and RE agents all knew the property had a septic and a private well prior to close of escrow. It appears either the appraiser did not know or marked the wrong box on the form.

Why wasn't the appraisal report returned to the appraiser for revision prior to acceptance by the lender?

 

[Mark K]

Why wasn't the appraisal report returned to the appraiser for revision prior to acceptance by the lender?

To the OP: And if the report was returned and the appraiser checked the appropriate box, would this have made everything better?

The septic failed several months after the owners took possession. Sometimes things break/go bad. That's the nature of 'things'. The owner knew the subject was on a septic system and failed to get a septic inspection. Shared liability? It took several months for it to fail. That means that its unlikely that a septic inspection would have found a problem.

Curious? If the gas furnace broke after a few months and the appraiser had checked the 'electric heat' box, does that make the appraiser liable?

The whole "...doesn't qualify for FHA loan..." is just a red herring so the owner can try to find someone and force them to pay for their defective septic system. I suppose its worth a shot, who knows what E&O policy might settle rather than fight.

 

[Stantheman]

To the OP: And if the report was returned and the appraiser checked the appropriate box, would this have made everything better?

The septic failed several months after the owners took possession. Sometimes things break/go bad. That's the nature of 'things'. The owner knew the subject was on a septic system and failed to get a septic inspection. Shared liability? It took several months for it to fail. That means that its unlikely that a septic inspection would have found a problem.

Curious? If the gas furnace broke after a few months and the appraiser had checked the 'electric heat' box, does that make the appraiser liable?

The whole "...doesn't qualify for FHA loan..." is just a red herring so the owner can try to find someone and force them to pay for their defective septic system. I suppose its worth a shot, who knows what E&O policy might settle rather than fight.

Most likely the E&O will tell the appraiser to offer a few thousand dollars to make it go away. A similar situation happened in our office regarding a home that was on septic and sewer was in the street. They wanted us to pay for the hook-up to sewer because the Realtor listed it with sewer, we didn't see any cleanouts and marked it sewer. It didn't change the value of the property; we did nothing and it went away.

 

[NJAPRAZE]

The appraiser on the property I purchased with an FHA loan marked my water and sewer as public therefore the required FHA tests and minimum distance requirements were not performed. The system has not only failed it will cost upwards of 60k to bring up to health and safety standards due to the size of the lot and having to move the well. The property does not qualify for a FHA loan due to the distance from the septic to the well as is being only 40ft. Any advice on who is liable?

What did your HOME INSPECTION report say about the well & septic systems, their functionality, positioning, etc.? Did you obtain one or waive this right?

 

[Huds_Harm]

I vote....Best Post in a Long Time.

Me: 17 year appraiser and 30 year RE broker. My wife: 27 year property attorney.

We both enjoyed reading this today.

My wife notes based on comments in this thread that the buyer, seller, lender, home inspector and RE agents all knew the property had a septic and a private well prior to close of escrow. It appears either the appraiser did not know or marked the wrong box on the form.

Why wasn't the appraisal report returned to the appraiser for revision prior to acceptance by the lender?

Great question. The appraiser is hired by the lender and required to determine the source of utilities whether public or private. Not sure why the lender did not do their due diligence in verifying that.

 

[Huds_Harm]

To the OP: And if the report was returned and the appraiser checked the appropriate box, would this have made everything better?

The septic failed several months after the owners took possession. Sometimes things break/go bad. That's the nature of 'things'. The owner knew the subject was on a septic system and failed to get a septic inspection. Shared liability? It took several months for it to fail. That means that its unlikely that a septic inspection would have found a problem.

Curious? If the gas furnace broke after a few months and the appraiser had checked the 'electric heat' box, does that make the appraiser liable?

The whole "...doesn't qualify for FHA loan..." is just a red herring so the owner can try to find someone and force them to pay for their defective septic system. I suppose its worth a shot, who knows what E&O policy might settle rather than fight.

Yes it would have made everything better if the appraiser determined the source of utilities correctly as required because the home would not have been approved thus I would not have a 60k bill.

 

[Huds_Harm]

Update the appraiser was provided receipt of the tank being pumped 3 months prior to appraisal, included a picture of the water well in the report and not only marked it as public for both items included verbiage that that utilities were public and in working order without the required tests on those items.

 

[NJAPRAZE]

Update the appraiser was provided receipt of the tank being pumped 3 months prior to appraisal, included a picture of the water well in the report and not only marked it as public for both items included verbiage that that utilities were public and in working order without the required tests on those items.

What did the report for the home inspector conclude? were all of the systems working properly as of the effective date? Did the home inspector note any issues?