What do you do if you can’t afford a new septic system? These homeowners want to know their options if the town requires a replacement they can’t afford. Sign up for Ilyce Glink’s free newsletter, Love, Money + Real Estate.

Q: We found out a couple of months ago that the leach field of our septic system has failed. The field is on our neighbors’ property. It was our neighbor who turned us in to the local code enforcer. 

Our leach field failed. The seller denies knowing anything about it.

A little history: We bought the house from a contractor who was selling the house. He denied knowing anything about the septic system. We found out that both properties were owned by the same person and then the properties were split up. 

It’s going to cost us $25k to fix the septic system – we don’t have it

The town is now requiring us to fix the system at a cost of $25,000, plus we’ll have to pay an additional $2,000 for an engineer. If we don’t get the septic system fixed, the town will give us a summons and we’ll have to vacate the house. 

Here’s the problem: We’re unable to come up with the money. We already have a home equity loan and have tried HUD, FHA and other grants, but to no avail. We are wondering if the title insurance company can be held liable in this situation. Otherwise, we’re at a loss about what to do to remedy the situation and stay in our home. Do you have any suggestions?

What Do You Do If You Can’t Afford a New Septic System?


A: You’re in a truly tough situation and for that we’re sorry. 

For those readers who aren’t familiar with septic systems, when you don’t have access to a municipal sewer system, you need a place to send your household wastewater. A septic system takes in that household wastewater and uses sewer treating technologies (along with a little help from Mother Nature) to release the water in a cleaner form. The leach field, also known as the septic drain field, is the actual place where the impurities are removed from the household wastewater. This happens underground, so the septic field might look like a grassy space or an open field.

But, your leach field isn’t on your property

So, yours has failed. The first question for you to consider is whether it matters that the septic system isn’t actually on your property.

You didn’t mention why your system failed or whether you can make repairs to the existing system. We suspect your neighbors got involved because they want you to stop using their land for your septic system. 

But here’s where it might get interesting. You actually might have an easement over your neighbor’s yard to continue to use the septic system as it is today. There is a concept in the law that gives the owner of a piece of land the right to use another’s property under certain circumstances.

How to Find Out If You Have a Septic Easement

We suspect that there is no written agreement regarding your septic system but you mentioned that your home was part of a larger parcel of land that was subdivided before you purchased it. We also suspect that a former owner of your property sold off a chunk of the original parcel to the neighbor. 

If that’s the case, when they split off the property and the septic system remained in place, the original owner would have received an easement to continue to use the piece of land that had been sold (which now belongs to your neighbor) for your septic system. How else could your former owners continue to use the home unless they had permission to use that septic system? 

You will, of course, want to speak with a local attorney to go through these details and to look at the local ordinances regarding repaired or replaced septic systems. Your local municipality may require that any septic systems that are located on someone else’s land be relocated when the system has come to the end of its useful life. So even if you have the legal right to use the neighbor’s land, the municipality may require the relocation of the septic field.

How to Fund Septic System Repair or Replacement

Now, let’s talk about money. We did a quick search online and found that the cost to install a new septic system costs around $8,000 to as much as $25,000. Your estimate appears to be on the very high end of what we found.

We’d like to see you get several additional estimates on the cost of a new septic system from different septic systems installation companies. Shopping around always helps ensure that the amount you pay is in line with the market cost. Get one estimate and you might get fleeced. Get three or four and you’ll quickly see which contractor(s) you want to do business with.

Clearly, you’re going to have to do something. A failed septic system isn’t viable long-term. The big issue is whether you can use the current location of the septic system or need to move it altogether (which may be far more expensive). Either way, you need to make the repairs and you need to find a way to pay for them.

We understand that finances are tight for many Americans. More than half of American households have lost income during the COVID-19 pandemic thus far, and as we write this in mid-August, the economic recovery seems to be stalling. So, we’re not surprised you’re having issues figuring out how to cover such a significant expense.

Asking For Help

First, can you buy some time from your local municipality? Can you ask to repair or replace the septic system over the next six months to a year. While you buy yourself some time, talk with the contractors about whether they can provide financing for their customers. We don’t know if these financing terms will be available to you or whether you can find a trustworthy contractor who will have enough liquidity that they could finance this project. Be aware that if you are offered financing this way, the terms might be quite onerous. 

Mortgage Refinance

What about refinancing your mortgage? Mortgage interest rates have hit new historic lows eight times so far in 2020. If you have some equity in the property, you might be able to refinance both of your loans and lower your monthly payments. That would free up some cash. Or, if you have enough equity, you might be able to take out some cash in the refinance. 

Looking for Grants, Tax Credits and Other Financing Options

Some states offer grants for replacing or repairing septic systems and others may offer state tax credits. Finally, local hardware stores may work with local contractors and be willing to finance the project. Some of the national hardware chains offer credit cards for up to $30,000 that may buy you a lifeline. The trick is, you need good credit and to be able to make your payments.

We suggest you start by asking your local municipality for an extension of time and start talking to the local septic installation companies and see what ideas they have for you. (Your local building department may be able to tell you who the municipality uses for its septic or sewage work and may even have a list of “approved” contractors, as a place to start.) If you research the companies and find the reputable ones, we hope that one of these companies may have something that might work for you. Once you choose your contractor and figure out what needs to be done, you can arrange payment terms.

Can You Hold The Title Insurance Company Liable?

Back to the title company. The title company insured your ownership in the land you purchased. You own the home and have no issue with that. There is a valid question about any easement that you may have for the septic system on your neighbors’ land. The title company might have been able to insure your continued use of the septic system by easement right. But it’s a stretch to think that they’ll cough up any cash to replace a faulty system.

One final question: Did you do a septic system inspection when you purchased the property? Were you told that the system wasn’t on the land you were buying? Did the seller disclose this to you? 

Review your purchase agreement and seller disclosure forms. When talking with the attorney, ask if there is a seller disclosure issue that could be raised with the prior sellers. And, if you had a septic system inspection, you should go back to the inspector to find out why you weren’t informed that the system was in such bad shape and that the septic field was located in your neighbors’ yard.

We hope some of this information helps. Good luck.


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