VA Pamphlet 26-7, Revised Chapter 12 Minimum Property Requirements



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Home > About Us > Real Estate Products and Services For Buildings With Wells > VA Pamphlet 26-7, Revised Chapter 12 Minimum Property Requirements

12.08 Individual Water Supply/Sewage Disposal Requirements

Connection to a public or community water/sewage disposal system is required whenever feasible.
Water quality for an individual water supply must meet the requirements of the health authority having jurisdiction. If the local authority does not have specific requirements, the maximum contaminant levels established by the Environmental Protection Agency (EPA) will apply.
If the health authority is unable to perform the water quality analysis in a timely manner, a commercial testing laboratory or a licensed sanitary engineer acceptable to the health authority may take and test the water sample.
Water treatment systems are not acceptable for wells which do not meet VA quality standards due to insufficient depth or a contamination source near the supply.
However, if public water is not available and individual water supplies in the area are served by an aquifer confirmed by the health department to be contaminated, the property is eligible for a VA loan if the lender provides
• a copy of the health department letter confirming the aquifer contamination
• evidence that all of the requirements in HUD Mortgagee Letters 92-18 and 95-34, concerning individual water purification systems, have been met for the property, and
• the veteran purchaser's written acknowledgment that he/she understands that the well water serving the property must be continuously treated by the homeowner, as required by the local health department, to be considered safe for human consumption.

The following requirements must be met for a shared well:
• The well must be capable of providing a continuing supply of safe and potable water to each property simultaneously, so that each dwelling will be assured a sufficient quantity for all domestic purposes.
• There must be a permanent easement which allows access for maintenance and repair.
• There must be a well-sharing agreement which − makes reasonable and fair provisions for maintenance and repair of the
system and the sharing of those costs − is binding on the signatory parties and their successors in title, and − is recorded in local deed records.
An individual sewage disposal system must adequately dispose of all domestic wastes in a manner which will not create a nuisance, or in any way endanger the public health.
Individual pit privies are permitted where such facilities are customary and are the only feasible means of waste disposal, provided they are installed in accordance with the recommendations of the local health authority.
If the local health authority has no requirements, U.S. Public Health Service requirements apply.


12.09 Community Water Supply/Sewage Disposal Requirements

If the property will be served by a community water and/or sewage disposal system, VA must be satisfied that the type of system and organization will provide adequate, continuous service at reasonable rates.
The water supply must be sufficient in size for the project. The quality of the water must be approved by the local or State health officials.
The sewage system must also be adequate in size and properly operated and maintained so as to prevent it from becoming obnoxious or a menace to public health.
For properties appraised as existing or new construction, the only requirement is evidence of approval of the facilities by the appropriate State or loca public utility and health authorities.
For properties appraised as proposed or under construction, the VA field station will review the following documentation:
• evidence of the financial stability and technical experience of the corporation, firm or organization operating the facilities
• evidence of approval of the facilities by the appropriate State or local public utility and health authorities, and
• rates for the water supply and/or sewage disposal systems (to ensure that they are not greater than the charges for like services to properties similarly situated).
A trust deed is required if the State Board of Health, Public Utility Commission, or similar State authority does not
• enforce compliance with its requirements
• fix rates, or
• provide for prompt relief in case of deficient operations or service or exorbitant rates.
The trust deed will be designed and established to assure satisfactory control and adequate protective measures.

The forms of trust deed for privately owned community systems (illustrated in HUD Handbook 4075.12) must generally be used without modification. Those HUD forms do not apply to systems owned and operated by an acceptable home owners' association.
Trust deeds will not be supplied as VA forms.
The VA field station will accept the trust deed if • the trustee is a responsible firm
• the description of the property in the trust deed is accurate and complete, and
• the charges set forth and the trustee's fee (normally about 5 percent and in no event in excess of 10 percent of gross receipts) are reasonable.
The trustee will preferably be a VA or HUD-approved lender, but may be any responsible, established firm (such as a title company) in the community. In the latter case, there must be no identity-of-interest between the sponsoring group and the trustee.
If the builder recoups system installation costs via sale of lots and the VA value estimate is predicated on the inclusion of such cost in the value of the lots, the service rate must not permit the builder to realize the installation costs a second time.

When the VA value estimate considers the system installation costs to be paid in full by the builder, then additional controls are needed to protect against possible future excessive rates or assessment charges which may result if the system is transferred to a public utility company.
The trust deed must provide that transfers
• may be made only to a governmental authority or public utility company controlled by a State utility commission or similar body, and
• any funds gained from such transfer shall be distributed among property owners served by the system.
This protection will be obtained by insertion of an alternate paragraph 1 in the trust deed.
Reference: See HUD Handbook 4075.12, Appendix A, page 11, or Appendix B, page 11, as applicable.
Any lack of assurance of satisfactory service, at reasonable rates, without the possibility of a future charge to pay for the utility systems would be reflected in a lower reasonable value.
If trust deed amendments are proposed or the above conditions are not satisfied, the situation must be reviewed by the VA field station legal staff prior to acceptance. In this situation, the field station may also need to coordinate with the local HUD office.

HUD    HUD Handbook references for community water and sewerage systems
Handbook References
requirements include • 4940.02, Minimum Design Standards for Community Water Supply Systems
• 4940.03, Minimum Design Standards for Community Sewerage Systems, and
• 4075.12, Central Water and Sewerage Systems-Ownership and Organization.

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