FHA Home Loan Appraisals - Water Systems

Public, Community, and Individual Water Systems and Shared Wells:  

Public water systems are owned, operated and maintained by the city, county or local unit of government with the power of taxation or assessment.  These systems do not require certification.  

Community water systems are a central system that is owned, operated and maintained by a private corporation or a non-profit property owners association.  It is the lender's responsibility to ensure that the community system is licensed and adequate to service the property.

Individual water supply systems (i.e. wells) may be acceptable when connection to a public or community water system is not available and there is assurance of a continuing adequate supply of safe potable water for domestic needs (to include auxiliary uses for lawn and garden maintenance).  The appraiser may condition for certifications of water quality and quantity such as the appropriate Health Authority approval and pump test.

Individual water wells are owned and maintained by the homeowner, and are subject to compliance with all water quality requirements of the local and/or State Health Authority having jurisdiction.  

As of June 19, 1988, new construction shall have lead-free water piping.  Solder and flux shall not contain more than 0.2% lead and pipe fittings shall not contain more than 8.0% lead.

Whenever the property lacks a connection to public water, water testing is required.  If the local authority is unable to perform the water quality analysis in a timely manner, a private, commercial testing laboratory acceptable to the local authority may take and test water samples.  Certification obtained within three months prior to the appraisal is acceptable if the appraiser4 and other parties in the transaction do not detect or know of possible existing problems.

Well Location:  Individual water wells should be checked to establish the distance from the septic system.  See below 

A well located within the foundation walls of a dwelling is not acceptable.  Water which comes from any soil formation which may be polluted, contaminated, fissured, creviced or less than 20 ft. below the natural ground surface is not acceptable, unless it is acceptable to the local health authority (certification is required for such cases).  Individual water wells are not acceptable for individual lots in areas where chemical soil poisoning has been or is practiced if the overburden of soil between the ground surface and the water bearing strata is coarse grained sand, gravel, or porous rock, or is creviced in a manner which will permit the recharge water to carry the toxicants into the zone of saturation.

The following shall be used in establishing the minimum acceptable distance between wells and sources of pollution located on either the same or adjoining lots.  These distances may be increased by either the health authority having jurisdiction or HUD:

 SUP1:  This clearance may be increased or decreased depending upon soil and rock penetrated by the well and aquifer conditions.  The clearance may be increased in creviced limestone and pereable strata of gravel and sand.  The clearance may be reduced to 50 ft. only where the ground surface is effectively separated from the water bearing formation by an extensive, continuous and impervious strata of clay, hardpan, or rock.  The well shall be constructed so as to prevent the entrance of surface water and contaminants.

SUP2: The recommendations or requirements of the local health authority shall apply.

SUP3:  This clearance may be reduced to 15 ft. only where the ground surface is effectively separated from the water bearing formation by an extensive, continuous and impervious strata of clay, hardpan, or rock.

Individual water wells should be located on the subject property.  If not, they must be on an adjacent property, and evidence of water rights and ongoing maintenance must be provided for acceptance of the well.

Also, possible sources of water pollution from the subject and adjoining properties must be considered.

Quantity of Water:  Water quantity is to be certified by either the local health authority or a licensed well driller/engineer.  The pump test must evidence that for new well construction the system is capable of delivering a flow of 5 gallons per minute over at least of 4 hour period, and 3 gallons per minute over at least a 4 hour period for existing.  Systems should be checked to establish that adequate amount of water pressure is present and can be sustained.

Holding Tanks:  The use of holding tanks are not considered to be normally acceptable as the sole source of water unless there is no other available source of acceptable water, the use of holding tanks is "typical" for the market area, the dependence of a holding tank does not adversely affect the marketability of the property, there are readily available sources of hauled water to serve the property, fire insurance is available at reasonably affordable rates, tanks are equipped with a clean-out plug at the lowest point and a suitable pressure relief valve, and the tank has a minimum capacity of 500 gallons or larger.

Misc:  Wells must be drilled no less than 20 feet deep and cased with steel or other durable, leak-proof, and acceptable casing material.  

If any of the following items may cause the property to be rejected or conditioned for certified compliance:

• Mechanical chlorinators are not acceptable

• Hand-dug wells, "bored" wells, and/or "sandpoint" wells are not acceptable

• Individual water systems utilizing springs, cisterns, lakes, or rivers are not acceptable.

Shared Wells:  Shared wells may serve existing properties which cannot feasibly be connected to an acceptable public or community water supply system.  A shared well shall have a valve on each dwelling service line as it leaves the well.  A shared well shall service no more than four properties.  A shared well must have a shared well agreement and shall be binding upon signatory parties and their successors in title.  The agreement shall also be recorded in local Deed Records.