Posted by Jeff Wahl on 11/1/2023 to
Real Estate Considerations
A test for the potability of water occurs frequently in rural real estate transactions as part of a listing offer condition, or as a requirement of financial institutions as part of the sale. Based on recent experiences, this article highlights the good practice of water testing before a property is listed for sale and potential ramifications that can occur when testing doesn’t take place.
Concerned about the water quality, a potential buyer facilitated a water sample as a condition of an offer to purchase a rural cottage. The water sample was conducted using a third party water treatment company with no affiliation to the realtors, buyer, or seller involved in the transaction.
Property DetailsSmall Rustic Cottage Located in a Rural Area
No Adjacent Developed Properties or Buildings
Shallow Dug Well with Surface Influenced Water Source
No Septic System Located on the Property
Grey Water Drain Field for Waste Water
Outhouse Located Near Main Cottage Building <30FT
Water Test Results Can Affect the Outcome of Real Estate Transaction
| Possible Outcome Sample for Bacteria Conducted e.Coli & Coliform Levels Determined Result: 0 per CFU/100mL Buyer Informed of Testing Result Cottage Sale Completed | Actual Outcome Sample for Bacteria Conducted e.Coli & Coliform Levels Determined Result: NDGOT per CFU/100mL Buyer Informed of Testing Result Buyer Withdraws Offer to Purchase |
NDOGT (No Data: Overgrown with Target) CFU is a unit which estimates the number of microbial cells (bacteria, fungi, viruses etc.) in a water sample over a given volume. When there is a NDOGT result, the test has a large number of bacteria present and Total Coliforms and/or e. Coli is identifiable in the sample, at an indeterminable amount. This is classified as an “overgrown” status and no numerical values for bacteria results are provided.
Possible Outcomes Due to Bacteria Identification
- Buyer walks away from sale
- Buyer has mistrust for seller and selling realtor
- Buyer counter offers requesting a substantial
- price reduction from the initial offer
- Seller counter offers with lower price
- Seller counter offers with installed water treatment
- Delays occur in the sale of the property
Testing Before Listing a Property can Avoid Complications with a Sale
Commentary
The discovery of bacteria in a water source adds complications and uncertainty, which could have been avoided had water sampling taken place prior to the listing of the property. If bacteria is present, there would have been the opportunity for proper treatment before the property entered the sale market.
The Water Condition Clause
If you are obtaining a mortgage for the purchase, the lending institution will usually require a Water Potability Certificate as a condition in the sale of a rural property. This process is typically facilitated through a public health unit or an accredited laboratory authority with jurisdiction. The certificate will indicate that there is no significant evidence of bacterial contamination in a water source.
Potability tests need to be completed before advancing the mortgage funding in a real estate transaction.
Benefits of Water Testing Prior to Listing a Property
Meets potability condition required for financial institutions
Meets potability condition when required as part of the offer
Avoids price renegotiation due to water clause condition
Adds intrinsic value to property when water is potable
Can add credibility when conducted by independent 3rd party
Provides realtor with an additional selling feature
Provides transparency for potential buyers
Shows commitment of the seller in the sales process
Best Practice RecommendationWhen listing a rural property not supplied by a municipal water source, it should be a requirement that potable water testing is conducted. Waiting to test the water once an offer is presented can lead to difficulties with the sale, and in some cases a very unhappy buyer who chooses to move onto a different property to purchase.
Volume 7 – Issue 2 Wahl H2O - Water Awareness
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