City Of Ventura Water Lateral Pipe Ordinance And How A 203k Loan Can Fix It.

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As of February of 2014, the city of Ventura water lateral pipe ordinance is requiring property owners who are selling their homes to have their water lateral pipe inspected prior to the sale of the home and the 203k loan may be on the horizon.

So why is the city of Ventura doing this and how is this going to effect selling the home and the close of escrow?  The answer is a bit complicated.  The first thing a home seller has to do is get a licensed plumber who has access to a camera that goes into the water lateral pipe and which than goes all the way out to where the pipe connects to the street, this is now a part of the home sale process.  It’s the homeowners responsibility to keep the water pipe clear of tree roots and debris, which has always been the case.  The video must be reviewed by someone at the city of Ventura, the escrow company has this contact information, to ascertain that this pipe is free of debris or not.  In fact the city of Ventura is going a step further with an ordinance that homeowners can not plant a tree within 15 feet of the water lateral pipe to ensure tree roots don’t get in the pipe and clog it up!  I personally had this happen with my water main line and had it replaced.

If the pipe isn’t free of debris and needs to be unclogged or at worse case scenario be replaced, than the city mentions this in their report which is than viewed by the prospective home buyer.  At that point, the home buyer makes a decision to continue with the home purchase or not depending how the purchase contract is structured but…..the city isn’t requiring that the damage be fixed prior to the close escrow.

It’s strictly a buyer beware tag on the property.  Sooner or later that pipe has to be fixed or replaced. But what do lenders think of this?  Nothing yet since it’s not a condition of escrow that the report be disclosed to the lender but you can bet this will change in the future.  Lenders will want to view this water lateral report, just like a termite report, and their collateral to be fixed or else they will deny the loan.  It’s not the case as of March of 2014, but think about it, if a seller says you can by their home but the water lateral inspection can’t determine whether or not they buy the home or not, and…the home buyer buys the home anyway, and than has to pay $10,000 to replace the water lateral pipe, they aren’t going to be happy and could come after the lender for damages.  Their plea will be “hey you knew about this and you let it happen”. The lenders have the deep pockets so they have to protect themselves so a loan denial will is likely.

So than what?  You have a house you really want to buy in a nice neighborhood, good schools, close to work but this water pipe issue pops and you or the seller don’t have the funds to pay for the repairs.  Here’s an option, the FHA 203k loan.  This loan allows a home buyer to close escrow in as is condition and do the work within 6 months, give the home buyer funds for repairs and remodeling and add the repair/remodeling funds to the purchase loan…all in one loan on a 30 year fixed rate.

This scenario isn’t the case right now but you can bet lenders are going to catch on and start reading the water lateral reports and making it a condition that these repairs be made.  Just know there is an option, the 203k loan, that can make everyone happy…. a closed escrow!

If you have a question or concern on the city of Ventura water lateral pipe ordinance and how it effects lending, or how the 203k loan works, go to my homepage and click on the “tell me your scenario” text in the upper right corner and I’d be glad to help.

Best,

Kevin Walton

Certified Mortgage Advisor

Best Capital Funding, a local and trusted lender.

800-506-0632 ext. 0

www.californiarealestateloanshop.com

www.affordableloansbykevin.com

 

 

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