New Requirements Regarding Failed Septic Systems

Within the last month legislation was passed mandating any lender financed property with a failed Septic System to have the repair installation completed prior to any closing of a purchase transaction. Prior to this legislation transactions could close as long as money was held in escrow (usually 1.5 times the estimated cost) and the system would be installed post closing. Lenders are now prohibited from closing a transaction with a failed system. This is going to lead to a lot of delayed closings. Title 5 inspections are usually not completed until just a week or two before closing. Cash deals are not subject to this requirement.