Septic disclosure

[Peter LeQuire]

I've got a question that relates to a recent change in Tennessee's disclosure law about septic systems/number of bedrooms and the 2005 1004.

A relatively new law requires a Realtor to not advertise a house as having more bedrooms than are stated on the permit for the septic system. My sense of it is that the appraisal should mirror this requirement: that is, the bedroom count in the appraisal should not be greater than the number of bedrooms allowed by the permit. In appraising a house that is listed, it's a simple matter to get a copy of the permit from the Realtor or the owner, since, generally, a copy is obtained in the process of listing the house.

There are instances in which the permit isn't readily available: refinances
and non-lending situations come to mind. There are also houses that were built before there was a requirement that septic systems be permitted. But, in lending situations, where the 2005 1004 is the required reporting format, how would you (my peers) approach disclosing what you did or didn't do. If there's no permit available,or if none were never issued, would you predicate the appraisal on an extraordinary assumption that the number of bedrooms observed are legal? (CB4?) If not, would that put you in the position of having to verify the permit or lack of permit for each appraisal? How would you communicate in the appraisal that, absent having been given a copy of a permit, the appraisal assumes, of necessity, that the observed use is a legal use?

Or would you just start incorporating a trip to the health department into each assignment?

 

[Don Clark]

Peter,

Geesh! What a hassle. As to the number of bedrooms, I would report what actually exist. I would also verify by whatever means I have to, what is opermitted. Then I would state whether or not the subject is in compliance with current requirements, if not, did the condition exist prior to the new requirement. Man I am sure glad i don't have to deal with such an issue. I only have to deal with 8 different courthouses, assessors, on any given day cause in my state we have independent cities that are not part of a county(we have 39 in all), and they all have assessors, courts, fire, police, etc. I am thankful when I get an assignment in North Carolina cause they have counties and I only do business in 2 of those.

 

[Otis Key]

There are instances in which the permit isn't readily available: refinances and non-lending situations come to mind. There are also houses that were built before there was a requirement that septic systems be permitted. But, in lending situations, where the 2005 1004 is the required reporting format, how would you (my peers) approach disclosing what you did or didn't do. If there's no permit available,or if none were never issued, would you predicate the appraisal on an extraordinary assumption that the number of bedrooms observed are legal? (CB4?) If not, would that put you in the position of having to verify the permit or lack of permit for each appraisal? How would you communicate in the appraisal that, absent having been given a copy of a permit, the appraisal assumes, of necessity, that the observed use is a legal use?

Or would you just start incorporating a trip to the health department into each assignment?

Peter, we recently had a state law inacted that requires ALL waster water systems (septics) to be licensed. Now that only applies if it's a sale or transfer for any reason. Not applicable to a refi. However, the state site is in Santa Fe and that's 1 hour each way, not to mention the interminable time waiting.

So, I always ask the seller when I call if it's licensed and then tell them I will need a copy for my files. If they don't know, then I CB4 it. On a refi I mention it, "for informational purposes, the waster water system will be required by the state of NM should the property ever be sold."

If I were in your spot, which thankfully I'm not, I'd not go to the health office, without an additional fee. It's outside the SOW for me. I'd tell the seller to give it to me or CB4 it. On refi's I'd mention it. For the sales, I'd stick with the similar room counts because I would be willing to bet soon that you will see a market reaction to that bedroom count. As it is, I even attempt to do that in town with city sewer anyway.

Good luck on it.

 

[Caterina Platt]

Peter,

Otis and I are dealing with the same sitch, but I'm taking a different stance. I don't request a copy of the septic report, I merely CB4 it.

I appraise what I see. If it's got a closet, it's a bedroom. Fannie doesn't even require closets, but at least one can make a reasonable arguement that a room without one really is best suited as an office or den.

Let them hash it out. I don't think we need to be brought into this 'name that room' game when folks want to dance around installing a bigger tank.

 

[Terrel L. Shields]

A relatively new law requires a Realtor to not advertise a house as having more bedrooms than are stated on the permit for the septic system. My sense of it is that the appraisal should mirror this requirement

Agreed. And I do this in a rurban development that has the nasty habit of calling large homes "one-bedroom" and so stated on permits so that they can build small septic systems for small lots.

That is a case where I disagree with Don Clark, a fairly rare circumstance. The reason? A lawsuit a few years ago against a local Realtor forced the Realtor to buy back a home advertised as "four bedroom" when, in fact, it was permitted for a single bedroom. The state Dept of health in its infinite stupidity and graft, sizes septic tanks and laterals at 100' per bedroom down to 50' per bedroom and 500 gal per bedroom. Small lots lack the space to physically put in 400' of lateral required for a 4 bedroom home, so architects designed plans with 1 bedroom, a rec room, a study, a sewing room, etc. The number of BATHROOMS and fixtures should be the sizing factor but it isn't. You could have 6 bathrooms and a single bedroom and get by with this hoax. And, as i mentioned, you could get sued. In Bella Vista it is as easy as going to the lot plan in the ARchtectural Control Committee office and they will make a copy which states the location of the leachfield and the sizing and bedroom maximums.

 

[Lobo Fan]

Why bedrooms? I would think it would be tied to the number of bathrooms. Or maybe that is just a Tennessee thing? Maybe the lack of indoor plumbing?

 

[Mr Rex]

Chuck, a local health department guy gave me the best short answer to why the number of bedrooms versus bathrooms. Because folks don't sleep in the bathrooms. You could have a 5 bedroom home with 1 bath or a 1 BR house with 5 baths, but only so many folks can live in a 1 BR house and use the facilities, but in a 5 BR house, you can expect a minimum of 5 folks using teh facilites daily, up to 20 if all the bedrooms are loaded like hotel rooms, as some of our new guests from the south are prone to do.

 

[Caterina Platt]

Or maybe that is just a Tennessee thing?

Nope. That's how ours are figured here in NM as well. I think 3 bedrooms require a minimum 1000 gallon tank, and 4 bedrooms push that to 1500.

 

[hastalavista]

I, too, am in agreement with Terrel.
I would report what exists (ala Don), but I would limit my value (bedroom count-wise) to what was permitted, or, to what the septic system was rated for (which I would need some kind of verification).
In my market, the value difference between a 2br home vs. a 3 or 4br home can be significant. I have heard, but have not verified, of a case in Sebastopol, CA, where an appraiser was sued because he appraised a property as a 4br home when the septic system was rated for less than 4br.

Personally, I think it is a good law.

 

[DJBanas]

Mike wrote:

"but only so many folks can live in a 1 BR house and use the facilities...."

Obviously you don't do much urban work. I've seen 8 single bed mattresses on a floor in a house in Trenton, 6 more in a 2nd bedroom. Only 1 bathroom."

How many people can sleep in a bedroom? Depends on your sexual proclivities, sleeping in shifts, family togetherness, etc. IMHO, It should be based on # of drains (toilets, tubs, sinks)