Obligation to Advise – Septic Systems

Posted on: Tuesday, July 30th, 2013

As a real estate agent it is important to understand, on behalf of your clients, what information they require for their lender to properly assist them. Recently I was reviewing the solicitor instructions that are provided to me by one of the many institutions that regularly fund mortgages for my clients. I was surprised to be honest to find the following clause:

Septic Systems
Applicable only to properties not serviced by municipal sewage systems: If the funds used to construct a dwelling or to purchase a newly constructed dwelling, obtain a certificate or letter from a municipality or other regulatory authority regarding the installation and/or use of a septic system in accordance with relevant standards. If the funds will be secured by a mortgage on a previously occupied dwelling, we require either such a certificate or letter, or confirmation from the Mortgagors that to the best of their knowledge the septic system is operating satisfactorily. The confirmation from the Mortgagors may be given by way of statutory declaration or other evidence satisfactory to you. For refinancing transactions, we require a certificate, a statutory declaration, or a septic system endorsement from a title insurer approved by us. The certificates and confirmations are to be retained in your file.

The fact that this is required by some lenders has changed my standard practice to add this clause to the statutory declaration that I have each purchaser sign. I have attached my standard declaration for your information.

The reason I raise this for you is that as real estate agents you are best positioned to ensure the seller warranties and represents that the septic system is operating satisfactorily. By inserting the standard warranty in all agreements with a septic system you have provided your client with the information that they require to sign the declaration that their solicitor will request. Also by understanding the importance of this clause you can defend the need for this warranty to be inserted when the agreement is being negotiated.


IN THE MATTER OF a mortgage (charge) from ** in favour of ** on the premises municipally known as **.

1. We are the purchasers/mortgagors of the above-mentioned property and have knowledge of the matters hereinafter deposed to.
2. There is not currently and nor has there been within the past 45 days, any construction, alterations, renovations improvements or building materials supplied to the subject property.
3. The proceeds of this mortgage will not be used to finance any construction, alterations, renovations or improvements to the subject property or to repay a mortgage which was taken out for this purpose.
4. We have carefully examined the survey prepared by (insert surveyor) and dated **, a copy of which is attached hereto, and have compared our knowledge of the buildings situate on the subject property with those shown on the said survey.
5. The survey accurately describes the property and buildings on the subject property as they exist today and there are no other buildings, additions, decks, swimming pools, outbuildings or any other structures not shown on such survey, except as referred to below:
6. Within the meaning of the Family Law Act (Ontario):
We are spouses of one another.
7. The residence will be owner occupied.
8. The down payment funds are not borrowed.
9. To the best of our knowledge and belief, the septic system is operating satisfactorily.

AND we make this solemn Declaration conscientiously believing it to be true, and knowing that it is of the same force and effect as if made under oath.

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

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