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Sewer Assessments ........... Are They A Lien Or Not?

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages NMLS #65149

It seems that I have been running into more than my share of Well and Septic issues, the latest one involves the town of Marlborough, which recently installed public sewers throughout most of the town.  As a result the town has assessed homeowners with a sewer assessment to pay for the work.

What tends to happen in small rural towns her in Connecticut is that when the town installs the sewers, they do an assessment for tying the property into the sewer system.  In the case of Marlborough that assessment is $12,060.00 per property.  In order to encourage homeowners to tie into the sewer system they provide for financing for 20 years, at a 2% with an annual payment of $603.00.

The issue then becomes whether this will be considered a lien or an assessment like those assessed on Condo's for major repairs, at time of sale. If it is considered a lien, then it will have to be paid off no later than the time of the Closing.  But if considered an assessment then the new buyer maybe able to assume the assessment.

After researching Fannie Mae and FHA Guidelines the guideline is similar for both:

As long as the assessment is viewed and accepted by the town as an assessment and not a lien, then Fannie Mae and FHA will consider it as an assessment also.  The new Buyer can then assume the assessment as long as they qualify for the payment, and the Seller is current on all assessment payments.  If the Seller is not current then on the assessment payments, then the Seller has to bring the payments current prior to the Closing.

The only Well and Septic issue that I have not run into lately is shared Wells and Septics, but I am sure that I will soon run into that as well.

 

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George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308  gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.

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George Souto
NMLS# 65149

C (860) 573-1308
CALL 7 Days/Wk
Fax (860) 760-6891

Email Me
About Me
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I am a Mortgage Loan Officer who can assist you with all your mortgage & refinancing needs in
CT, and RI

I can assist you with your Conventional,
FHA, CHFA, VA, USDA, & 203K loan programs.

I reside in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Haddam. E. Haddam, Higganum, Chester, Essex, Deep River.

 

Comments(5)

Brenda Mullen
RE/MAX Associates - San Antonio, TX
Your San Antonio TX Real Estate Agent!!

This is a good topic to bring up George.  I would automatically assume it was an assessment, but since I am not qualified to make that decision, it's good to have the acutal information.  

Oct 26, 2011 02:25 PM
Debbie Walsh
SHAHAR Management - Middletown, NY
Hudson Valley NY Real Estate 845.283-3036

Very interesting information.  In Sullivan County over here there are alot of shared wells and some septics.

Oct 27, 2011 12:17 AM
Peggy Chirico
Prudential CT Realty - Manchester, CT
REALTOR® 860-748-8900, Hartford & Tolland County Real Estate

Hi George - Again, great information! I did run into a shared well situation with FHA financing a while back and found that you can still finance with no more than 4 on the same well (with other requirements too), but I will be looking forward to your update on that.

Oct 27, 2011 02:30 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

George, I would think that it would be an issue with the lender if anything. Some may see it as an assessment and others might see it as a lien. I know that a few years back, when Wolcott put water in some parts of town, it was called a lien, and sellers had to clear it off in order to sell their homes.

Oct 27, 2011 05:22 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

George

THis is excellent information for homeowners, and potential buyers, in your area. I suspect there are manhy who might be affected, and it certainly raises a good point for others to be aware of in areas where wells and septics are common and they have converted to sewers, and perhaps also town water.

Jeff

Oct 27, 2011 02:35 PM