My wife and I were representing a buyer to purchase a remodeled home in the county on well and septic. After our buyer entered into a contract to buy their home, we discovered through a septic inspection that the seller had a non-permitted septic system. Needless to say, this was a big surprise since we had pulled a copy of a septic permit on file for this home and that the seller represented on the North Carolina Residential Property Disclosure Statement that there were no problems with the septic system.
After notifying the listing agent of our findings, the seller called us all out to meet about it at his home. What we learned was that a septic system had been installed in a different location than the permit on file showed, and had not been permitted by the Alamance County Health Department. The seller said the septic system backed up just over a year ago and that he had it repaired. It was at this time that we believe he was made aware that his septic system was not permitted (he probably bought the home without getting the septic system inspected and his agent only pulled the original existing permit on file at the time of purchase). He contacted the Alamance County Health Department about repairing the septic system and getting it permitted. The seller decided to have an unlicensed friend make the septic repairs and bypass obtaining a permit, due to the cost involved in going through the permit process. We were shocked to find out that this seller had willingly and knowingly failed to disclose to his listing agent and all prospective buyers on the open market, the material fact that his home had a non-permitted septic system.
Luckily for the seller, our buyer still wanted to buy his home at the time if the seller could get a new permit issued for a three-bedroom septic system, which he agreed to do. As it turned out, this seller tried to get the Health Department to issue a permit for the existing septic system which they declined to do. As a result, the seller did not obtain the permit, breached his contract, and negotiated a settlement agreement refunding most of the buyer's incurred expenses.
Fortunately for this seller, our buyer decided not to sue him for breach of contract preventing him from selling his home to any other buyers. He also could have faced legal problems for failing to disclose on the North Carolina Residential Property Disclosure Statement that his septic system was not permitted, which he knew and was a Material Fact and a Willful Omission.