Legal Agreements When Buying a Property with a Shared Water Well
Often, especially in more rural areas, it's not uncommon for several neighbors to share a single well and water supply system. While this can be a convenient method for receiving your water, sharing a well and managing a shared system requires diligence and cooperation among all of the parties involved.
There are some specific legal requirements for a shared well agreement as well as some simple precautions to take before you buy a home with a shared well.
Do Your Due Diligence Before Purchase
When considering the purchase of a property with a shared well, it's important to begin your research by reviewing all recorded agreements regarding the well, particularly the deeds of the property owners involved. It's important to make sure that the deeds contain the proper easements permitting access to, use of, and maintenance of the water system. If there is no shared water well agreement in place, have one drawn up.
Make sure to conduct a rigorous well inspection. Research the well's history, including when it was drilled, all maintenance records, and the results of any and all well tests conducted. Visually inspect the well location, the distance from potential pollution sources (especially in agricultural areas) as well as the soil type and subsurface conditions. If the water well is not located on your property, check that the property owner where it is located does not engage in any land use practices that could harm the well, or affect the water quality.
Finally, check and document the current well capacity. Ask your water well professional to conduct a pump/flow test. Under federal mortgage insurance guidelines shared wells must meet minimum flow standards. Have the well tested for lead, nitrate, nitrites, and bacteria. This water quality test is also required under federal mortgage insurance guidelines.
Federal Mortgage Lender Requirements
HUD, the US Housing and Urban Development department sets the minimum standards for shared wells. These must be met in order to qualify for an FHA insured mortgage.
Under these guidelines a shared water well:
• may only serve existing properties which cannot be connected to an acceptable public or community water system
• shall serve no more than four properties
• shall have a valve on each dwellings service line as it leaves the well
• must have a shared well agreement in place that is legally binding upon signatories and successors in title
• must meet a minimum flow rate of three gallons per minute. A lower yield is allowed if pressurized storage of no less than 720 gallons is provided to each dwelling. Yield must be demonstrated by a certified pumping test
• must show proof of safe and potable drinking water, such as a letter from the local health authorities, or another certified agency reporting the results of a water test
Only if all of these guidelines are all met, may the home be eligible for an FHA mortgage loan.
The Shared Water Well Agreement
A legal agreement is required in order to receive an FHA mortgage loan. This agreement is essential to protect your access, and the lenders note. It should spell out all of the costs and responsibilities for maintaining the supply for each party. HUD sets standards for shared well agreements and in many states, the state's health department may also have legal requirements as part of the well approval process.
Under HUD's minimum standards a shared well agreement should:
• specify cost sharing to provide power, repairs, testing and disinfection of the system. This includes replacing components including the pump, making improvements to extend the systems life as well as restoring yield
• require each user to promptly repair leaks in their service line, pay for repairs or damage caused by residents or guests on their property and maintain and replace the water system lines to their residence
• request testing by a certified local authority at any time, for any reason, by any party at their expense
• require corrective measures if testing uncovers significant deficiencies, with the consent of a majority
• assure ongoing water service to all parties
• Prohibit water use by any party other than for bona fide domestic purposes. Spell these out. There have been many conflicts over matters like installing a sprinkler system
• Prohibit the connection of any new residences without the consent of all parties, appropriate amendment of the agreement and compliance with all above points
• Prohibit any user from locating or relocating a septic system within 50 feet of the shared well
• establish and spell out all easements for elements of the system, including access, necessary workspace for system operation, maintenance, replacement, improvement, inspection, and testing.
• Provide a clause for binding arbitration for any major disputes regarding the system or the terms of the sharing agreement
For rural homeowners the benefits of a shared well can include lower operating costs and access to plenty of clean high-quality drinking water. When done properly, lenders will provide mortgages on properties that share a well. It's important to have a solid agreement in place between all parties in order to guarantee conflict-free operation and outline legal responsibilities for each member household.
With cooperation and shared responsibilities, owning a home with a shared well can be beneficial. If you'd like more information HUD publishes guidelines for shared wells, and here at Skillings & Sons we're always happy to provide you with information whenever we can. If you have any questions about shared wells please feel free to give us a call. If we don't know the answer, we'll point you to someone who will!