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

The situation

No one can guarantee the status or shelf-life of a septic system. However, lenders sometimes ask lawyers for an opinion on a septic system’s satisfactory operation.

Sample lender instructions

Sample A

If the funds will be secured by a mortgage on a previously occupied dwelling, we require either a certificate or letter from a municipality or other regulatory authority regarding the installation and/or use of a septic system in accordance with relevant standards or confirmation from the Mortgagor(s) that to the best of their knowledge the septic system is operating satisfactorily. The confirmation from the Mortgagor(s) may be given by way of statutory declaration or other evidence satisfactory to you.

Sample B

A septic tank certificate and any other certificates required by the appropriate governing body are required for existing construction only where you have knowledge that there may be problems with the septic system.

Practice Guidance

• When a borrower contacts you before signing an offer to purchase, advise the borrower to include a pump out of the septic system by the vendor and a report on its condition as a condition of purchase.
• When a borrower contacts you after signing an offer to purchase, and before the expiry of an inspection or review period, advise the borrower to request the vendor’s consent to a pump out of the septic system and get a report on its condition before the inspection/review period ends.
• Ask the borrower or the vendor’s lawyer for information about the septic system.  For example, its date of installation, name of installer, plan or drawing showing the design of the system, municipal or other regulatory approval, and pump out records. Also, inquire about any changes to the use of the property since the system was installed. For example, the addition of bedrooms or a secondary suite. Note that the certificate of installation is not a reliable indicator of the current state of the septic system.
• Retain copies of any documents that you have received. Confine any report to the lender to identifying the documents received and the information in them or furnished by the borrower. State that your report is based solely on the contents of these documents and information, and refrain from giving an opinion on their meaning or effect.

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