Are you planning to buy or sell a property with an Onsite Wastewater Treatment System (OWTS), also known as a septic system?
There are new County requirements and recommendations to help you know if the system is operating properly and what kind of upgrades might be needed in the future. OWTS standards have become more stringent and the cost of repairing or upgrading an OWTS to fix a failure or allow a remodel could be $50,000-$100,000. It is important to be informed of potential future costs when considering purchasing a property with an OWTS. Sellers should also be aware of these issues as they could create hurdles during the sale process.
NEW Requirements
Beginning July 1, 2023, when a property is transferred, a septic tank inspection report must be completed and a disclosure form that describes possible concerns with an OWTS must be completed by the seller and buyer (County Code Section 7.38.216).
Sellers of real property must complete a point-of-sale septic inspection report to identify any defects in the Seller’s OWTS and other characteristics of the system. If such inspection shows the OWTS is failing, then repairs that meet the County’s OWTS standards must be completed by the Seller prior to the sale of the Property or the responsibility to complete the repairs within 90 days can be transferred to the Buyer if the buyer agrees and a transfer of responsibility form is completed and filed with County Environmental Health.
- Which properties fall under this jurisdiction?
All properties that are within Santa Cruz County and that are served by an onsite wastewater treatment system / septic system (OWTS).
- What properties are exempt from this requirement?
Properties that are served by public sewer. Undeveloped parcels. Properties that have a new OWTS which was installed under permit within 5 years. Properties that have an OWTS which have been repaired or upgraded under permit within 3 years. Transfers without consideration or transfers between existing co-owners (including but not limited to, gifts between family members, transfers due to death via joint-tenancy, probate transfers, and trust distributions)
- What is the purpose behind this?
Property owners are responsible for maintaining their OWTS. The purpose of the Point-of-Sale Program is twofold: to protect public health and to protect buyers from unforeseen repair and upgrade obligations. Therefore, the Program includes evaluating septic systems, identifying problems and repairing failing systems, locating unknown systems, and making records available to the public.
- Who is responsible for having the Point-of-Sale inspection done?
Prior to the close of escrow, the seller is responsible for the inspection and any required repairs. The responsibility for repairs may be transferred to the buyer by filling out the “Transfer of Responsibility” form.
- Why would a full OWTS evaluation report be needed?
The pumping inspection report is indicative of the condition of the OWTS at the time of the report but may not reflect performance in the past or expected performance in the future. It also does not provide information regarding compliance with current standards or site constraints. It is recommended that this additional information be obtained by hiring an approved provider to prepare a full OWTS evaluation report. (under development)
This is particularly useful if the buyer plans to remodel the home in the future. Depending on site conditions and history, remodels may require an upgrade of the OWTS at a substantial cost and the buyer should be aware of that prior to purchasing the property.
- If my septic tank was pumped recently, is the report still acceptable?
The pumping report must have been completed within 12 months prior to the close of escrow, and it must also include a flow test of the leach field using at least 250 gallons as measured with a flow meter.
- If the report says there are problems with the OWTS, what happens?
Failures or structural defects must be corrected under a permit from EH. Ideally this would be done prior to the close of escrow, but the buyer can choose to accept the responsibility for making the repairs by filing a “Transfer of Responsibility” form with EH.
The work must be completed within 90 days of the close of escrow. The buyer may request an extension if they are making a good faith effort to complete the work, circumstances beyond their control are causing delays, and interim measures are being taken to prevent any public health or water quality impact.
- Can the responsibility for making repairs to the OWTS be transferred from the seller to the buyer?
The buyer can choose to accept the responsibility for making the repairs by completing and filing a “Transfer of Responsibility” form with County EH. (link to form here) The seller will remain the responsible party unless a “Transfer of Responsibility" form has been submitted and approved by Santa Cruz County Environmental Health (EH).
The work must be completed within 90 days of the close of escrow. The buyer may request an extension if they are making a good faith effort to complete the work, circumstances beyond their control are causing delays, and interim measures are being taken to prevent any public health or water quality impact.
- Can a third party pay for the repair or can it be paid out of escrow?
Nothing prevents a third party or escrow account from paying, but the seller remains the responsible party unless a “Transfer of Responsibility” form has been submitted and approved by EH.
- If there are problems with my OWTS, does that have an impact on the value of the property?
Problems or deficiencies with your OWTS can have an impact on the value of your property and can affect the completion of a sale. That is why it is recommended that you have your OWTS evaluated prior to the sale process so that you are aware of potential issues and can choose to address them early. Prospective buyers can thus be fully informed up front, with less chance of complications later in the sale process.
- What if there is an unpermitted OWTS?
If the OWTS is unpermitted but is working satisfactorily as demonstrated by the pumping inspection report, no further action is required at the time of sale. But the buyer should be aware if the OWTS is unpermitted, there may be limited information in the EH records about the OWTS. Without records, it is more difficult to predict how the OWTS will perform in the future. And, if the new owner wants to remodel in the future, the OWTS will need to be shown to meet standards, by an approved qualified professional, or be upgraded to meet standards under permit. Click here to search the Santa Cruz Environmental Health public records.
- What if there are unpermitted buildings or additions on the property?
If there are unpermitted buildings or additions, the OWTS may or may not meet current standards. If the OWTS is working satisfactorily as demonstrated by the pumping inspection report, no further action is required at the time of sale. However, if the OWTS is undersized, it could become overloaded and fail in the near future.
- What about future changes to the property?
If the new owner ever wants to remodel, the OWTS will need to be shown to meet standards, by an approved qualified professional, or be upgraded to meet standards under permit.
- What if information has been falsified?
A prospective buyer is encouraged to exercise diligence in fully evaluating the OWTS for a home they are considering purchasing. The buyer should not rely on the pumper inspection report done at the time of sale but should also consult the EH records online for history on the OWTS. If there are conflicts in information, the buyer should consider requesting a full evaluation of the OWTS by an approved provider.
- What if an OWTS has been installed on the neighbor’s parcel or vice versa?
An OWTS may be permitted on another property with a recorded document granting the easement. In some cases where property lines may be unclear, a permitted OWTS may have been installed on another property. If the OWTS is installed on another property without an easement but is working satisfactorily as demonstrated by the pumping report, no further action is required at the time of sale. But the buyer should be aware that this could become a civil matter with the other property owner.
- What if an easement for an OWTS on a different property exists?
If the OWTS is installed on an easement on another property, the buyer should evaluate the terms of the easement to ensure that the easement will allow future repair and upgrade of the OWTS.
- What do I need to do if my OWTS is an enhanced treatment system?
Enhanced treatment systems have additional treatment and control components that provide a much cleaner effluent as needed to mitigate site constraints such as high groundwater or limited dispersal area. These more complex systems are required to be regularly inspected and serviced by an approved Onsite Systems Service Provider (OSSP).
When a property with an enhanced treatment system is sold, the buyer must be provided with an inspection report prepared by the OSSP within the 6 months prior to the close of escrow. New owners are required to enter into a service agreement with an approved OSSP at the time of sale.
Recommendations
It is recommended that the Seller complete the septic tank inspection form prior to listing the property for sale. That way any system deficiencies can be corrected early without potentially jeopardizing the sale process. The Seller should also consider having a more thorough Point of Sale OWTS Evaluation Report completed by an Approved Provider that can be provided to prospective buyers to help reduce potential delays or hangups in the sale process.
Buyers are strongly advised to research the history and condition of the property’s current OWTS along with any conditions on the property that may require the OWTS to be upgraded in the future. Pumping reports and flows tests conducted for a septic tank inspection are only indicative of conditions at the time of the pumping and may not indicate past failures, wet season failure, future system performance, or upgrade requirements for future remodels. Buyers are highly encouraged to consult the Environmental Health files showing the property history and are also strongly encouraged to hire an Approved Provider to complete an in-depth OWTS Evaluation Report.
For more information email: ENVPointofSale@santacruzcounty.us