Bulletin: IA2009002

Dear Associates:

The Iowa Legislature has recently passed a Bill, now codified as Section 455B.172, Code 2007, which requires inspection of private sewage disposal systems prior to any transfer of ownership, including seller financed real estate contracts. This new provision will be effective July 1, 2009.

The statute prohibits the County Recorder from recording any deed or other property transfer conveyance until either: (1) a certified inspector's report is provided which documents the condition of the private sewer disposal system; or (2) the buyer has executed and submitted a "binding acknowledgement" with the county board of health to conduct a certified inspection "at the earliest practicable time" and to be responsible for any required modifications.

The currently-required Groundwater Hazard Statement is in the process of being modified to address this issue in part, and to provide information that will assist the County Recorders in determining whether or not to record a conveyance.

As title agents, it is difficult, if not impossible, to determine whether a given property is served by a private sewage disposal system, or is on a municipal sewer system. However, the inability to record a conveyance due to noncompliance with this statute raises serious issues.

In addition, there are currently few, if any, regulations governing inspector qualifications, training, and certification; uniform inspection standards; or even acceptable inspection forms.

Furthermore there are a number of transactions that are exempt from the new statutory requirements.

Effective immediately, any commitments or policies issued in connection with transactions involving Iowa property should contain an exception such as:

Any consequence, including inability to record a conveyance instrument in timely fashion, due to absence of satisfactory evidence of compliance with the private sewer disposal system inspection requirements of current Iowa law.

Such an exception should not be deleted without consulting with Stewart underwriting personnel.

This Bulletin will be amended and supplemented as regulations are developed.

If you have questions related to this bulletin, please contact your local underwriting personnel or Stewart Legal Services.

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