One worry I have for my upcoming park is their private utilities system especially their septic system - leach fields. Are there any kind of insurance I can buy to protect myself from a high bill of $40,000 to replace the leach fields?
I have dug into this question before and could never find anyone that would write that coverage. The key issue is because these systems typically fail due to poor maintenance, over utilization, or bad design.
Because all of these things can be tested prior to purchase it would be prudent to have a reputable company perform a diagnostic and stress test of the private utility systems. The scenario would be that it has been raining for 12 hours and everyone is taking their morning shower. Can the leach field handle that? If so you’re probably in pretty good shape.
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Agreed. The problem with this park is that it’s working fine right now. However, imthe septic system is 40 years old. That means it’s going to break down soon. Am I correct on that?
If a leach field hasn’t failed in 40 years, it probably never will. You’re going to have issues like failing pumps, or maybe some broken lines here or there. Does the county have a moratorium on the type of septic system in place - where they will not allow repairs to it?
With that said, your property insurance should cover things like a truck driving over your septic tanks and falling into them.
Got it. Why is it that the leach will never fail if it hasn’t failed for 40 years? Just want to understand the logic behind this. (That is definitely good to know though)
The reasons leach fields fail is because of soil that cannot handle the drainage, excessive biomat (due to a prolonged reduction in bacterial activity), and due to inappropriate use such as pouring 50 gallons of cooking oil down the drains, or flushing baby wipes down the toilets.
You can only really control the tenant awareness of what to put down the drains - the other things are relatively stable and would have shown a history of problems by now.
This is awesome. Thank you!
No problem. I want to emphasize my prior point… Be sure to check with the county on any septic moratoriums. These can force you to replace the whole system if a car did happen to drive over one of the septic tanks and break it.
I have extended family with an old septic system from the 1960’s. The county now requires everyone have aerobic systems, and will not let any licensed septic installers or repair-people work on non-aerobic systems. This means you have to either perform an illegal repair yourself or with someone not licensed, or replace the system with a “compliant” system.
It’s not clear if your insurance would cover the whole replacement cost in that situation. Have a detailed conversation with your provider about this specific topic so you understand the risk you take on.
Keep us posted.
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Will do! The more I approch closing date, the more anxious I become. My worst nightmare is to have all leach fields fail right after I take over. I’ve purchased other properties when huge Capex slammed me right after I take over…