If you`re in the market for a home in a rural area, you may come across a property that is serviced by a shared well. This type of well is typically used by a small group of neighbors who have agreed to share the cost of installing and maintaining the water supply. However, if you`re planning to obtain an FHA loan to purchase this property, you`ll need to ensure that the shared well agreement is FHA approved.
What is an FHA Approved Shared Well Agreement?
FHA approved shared well agreements are legal documents that outline the responsibilities of property owners who share a well. These documents must be approved by the local health department and typically cover topics such as maintenance, repairs, and water testing. In general, the agreement should ensure that all parties involved in the shared well have access to clean and safe drinking water.
Why is an FHA Approved Shared Well Agreement Important?
For FHA loans, a shared well agreement is essential because it helps protect the lender`s investment. If the shared well is not properly maintained and becomes contaminated, it could impact the health and safety of the entire community. Additionally, if the property is serviced by a shared well that is not properly approved, it could be considered a violation of FHA property standards, which could result in the loan being denied.
How to Ensure a Shared Well Agreement is FHA Approved
To ensure that a shared well agreement is FHA approved, it`s important to work with a knowledgeable real estate agent and a reputable lender who is experienced in rural property transactions. These professionals can help guide you through the process of obtaining an FHA-approved shared well agreement, which typically involves the following steps:
1. Schedule a well water test: Before the shared well agreement can be approved, the local health department may require a water test to ensure that the well is supplying safe drinking water.
2. Draft the agreement: Once the well water test has been completed, a legal professional can draft the shared well agreement that outlines the responsibilities of each property owner.
3. Submit the agreement for approval: The shared well agreement must be submitted to the local health department for approval. This process can take several weeks or months, so it`s important to plan accordingly.
4. Obtain lender approval: Once the shared well agreement has been approved by the local health department, it must be reviewed and approved by the lender.
By following these steps, you can ensure that your shared well agreement is FHA-approved and that you`re eligible for an FHA loan to purchase the property.
In conclusion, if you`re considering purchasing a rural property with a shared well, it`s important to understand the requirements for obtaining an FHA-approved shared well agreement. By working with knowledgeable real estate and lending professionals, you can ensure that your purchase meets FHA property standards and that you have access to safe, clean drinking water.