Sewer lateral inspections are an everyday occurrence and that comes part and parcel with a $4500 refundable deposit that each buyer must put in play to insure the work gets completed in a timely manner. This is a requirement on every sale. It is a pretty simple test where a camera is run through the sewer lateral. In some cases the sewer lateral is pretty long and there have been no clean outs installed to to even do the test some "clean outs" must be installed.
The camera will tell you if there is a break in the sewer lateral that would required replacement. If it is broken it must be repaired. It only makes sense.
How does this interface with the FHA 203k loan guarantee program? Simply this, if you are doing an FHA purchase in any of the areas where cities and EBMUD have imposed this “refundable deposit” we have reached some middle ground. As long as we meet their criteria EBMUD, on a case by case basis, will consider waiving that fee.
Remember it is a refundable deposit to insure the completion of the work in a timely manner, therefore, since an FHA loan requires this type work is the first work completed and must be part of the first draw it is now a good chance the fee can be waived provided you meet certain requirements that include but are not limited to having the work being included in the first draw, and having it completed within six months of the sale of the property.
If you are using a 203k consultant that isn’t aware of this potential waiver have them get hold of my office and we’ll show them what they need to know to achieve the desired result of no deposit.
*** IMPORTANT NOTE *** HUD requires septic and well work to be the first work completed on a 203k project - don't wait to get it done while doing other work or the lender doesn't have to release those funds until the septic or well work has been completed. It is not clearly addressed how this affect sewer repair so don't be caught off guard, get this work completed first to be safe.