The Mortgage Instructions Toolkit provides practical guidance for lawyers responding to lender requests in residential real estate transactions. This page addresses private water supplies.

The situation

A lawyer is unlikely to be able to obtain confirmation from an appropriate authority that well water is ‘safe for human consumption’, or that a private water supply is adequate for use of the mortgaged property.

There are many possible deficiencies with well water, including:

• Contamination - The range of contaminants covered by an analysis of well water is limited. For example, testing may only look at bacterial contaminants, when there are numerous potential contaminants (such as lead and arsenic) that can make well water unsuitable for human consumption.
• Flow rates - The flow rate may vary with the time of year, the uses of the property (such as family or single person use), and nearby changes (such as new construction). 
• Sufficiency - The adequacy of a water supply depends on many factors. A wet season or two can temporarily increase the underground water resource. Extended droughts may significantly reduce or deplete the available water resource.

Public health units, other government authorities, and private laboratories do not issue certificates beyond the results of the tests they conduct. Rather than a “safe for human consumption” statement, the results usually say something like, the water sample “meets the bacteriological standard for Canadian water”. This does not account for other contaminants and is limited to the date, time and location where the sample was taken. It is insufficient documentation for you to confirm for the lender that the water is “safe for human consumption”.

Title insurance policies may not cover all of the water deficiencies that may arise. Policies typically provide indemnification for actual losses when a purchaser has received a notice of violation, there is deficiency in a work order, or there was a work order issued after the title insurance policy was put in place.

Sample lender instructions

If the subject property is not connected to municipal services, you must obtain confirmation from the appropriate authority that the water is safe for human consumption… or put title insurance in place.

Practice Guidance

• Obtain a well water analysis on potability from an accepted source and, if possible, a well driller’s report or certificate on flow.
• Advise the lender that you have reviewed the statement or certificate from a laboratory (and any well driller’s report or certificate) for water samples that you understand were submitted for the property. Simply quote the pertinent conclusions in the statement or certificate, making it clear that you are only quoting from the material provided by the laboratory or other third person.
• Do not give an opinion on the quality, flow, sufficiency, or other aspects of the water.
• Do not state or imply that any water is safe for human consumption.

Title insurance to be put in place - borrower client

• Review the title insurance policies of different insurers to compare coverage for well water issues.
• Discuss the limitations of title insurance with respect to well water with your client.
• Document your client’s understanding of the risks and the agreement to accept them.

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