Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

230 responses to “Surprise! You Owe Thousands of Dollars!”

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  1. softwarengineer

    My Bill to King County Sewer Was about $1000, a Year Ago

    Same corrupt logic, we can bill ya, so we will.

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  2. Feedback

    Tim, I received one of those bills last year and promptly threw it away. I’ve never heard from this so-called agency again. If these men believe they are owed thousands of dollars, they can kindly point out the section of the law that makes me obligated to pay.

    Tim, you’re a smart man — you don’t believe everything that you’re told. Neither do I. Stand your ground!

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  3. Eastsider

    If you purchase a new home, the builder should have disclose it during the sale.

    You can’t just throw the bill away. They will put a lien on your house.

    You have a choice of paying it off or paying it monthly with interests. You can find out the interest rate from King County to decide if you want to pay it off.

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  4. wreckingbull

    According to the FAQ, we should look to our trusted real estate agents to handle disclosure to prospective buyers. Anyone know why this did not show up in escrow? If it was not properly disclosed, could our reader have legal recourse?

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  5. ChefJoe

    I thought that was how the whole Brightwater plant construction was snaked through by Ron Sims. The costs of the new plant would be paid for by new construction… so everyone who thought they were staying put in their vastly appreciating homes (or figured the 8% yearly gain would more than cover it) were appeased and voted to have the new guys pay for it.

    My understanding is that the monthly brightwater fee is $52 so you must have several years worth of missed payments they’re after you for. Similar to how you’d owe back taxes on a property I guess.

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  6. Kary L. Krismer

    Agents generally know about this. It’s even a choice on the Purchase and Sale agreement as to whether the seller has to pay it at closing or the buyer assumes the charge. If that wasn’t explained to the buyer, it’s the agent’s fault to some extent, and the client’s fault for not reading the Purchase and Sale agreement (Form 21, page 1, paragraph 15 and page 3 paragraph H.)

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  7. Kary L. Krismer

    This link within Tim’s FAQ link above is very useful in dealing with Snohomish County properties. I have probably sent it to at least two agents within the past 30 days.

    http://www.kingcounty.gov/environment/wtd/About/System/ServiceAreaMap.aspx

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  8. Kary L. Krismer

    By wreckingbull @ 4:

    According to the FAQ, we should look to our trusted real estate agents to handle disclosure to prospective buyers. Anyone know why this did not show up in escrow?

    For some reason it’s not considered a lien against the property. It does, however, show up on preliminary title commitments. This is from a Ticor commitment for a property in Snohomish county.

    11. Liability for Metro Sewer Capacity Surcharges:
    Inquiries regarding sewage treatment capacity charges should be directed to King County Department of Finance. Fax request, including the property address to 206-263-6073.

    It would show up at escrow only if the P&S agreement says that the seller will pay the amount at closing.

    There is also this language in the preliminary commitment, which would cover this charge and any unpaid water bills.

    6. Any lien for service, installation, connection, maintenance, tap, capacity, or construction or similar charges for sewer, water, electricity, natural gas or other utilities, or for garbage collection and disposal not shown
    by the Public Records.

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  9. Kary L. Krismer

    BTW, the reader’s understanding of other utilities is not entirely correct. This is basically a charge for expanding the system. With natural gas, for example, if the gas line is three houses down, you have to pay to bring the gas line to your house, and then pay to bring it onto your property. If you do that, and then the house next door decides to connect five years later, I don’t think there’s a way of you recovering the cost of putting the line in the street (although I think there may be for some limited time).

    The sewage system tends to work a bit differently. Rather than expand it piecemeal like the gas system, they typically do an entire neighborhood, taking the connection to each property’s curb. They don’t charge for having done that until you actually connect to sewer.

    One more thing. Apparently there are some parts of King County where the water/sewer district will charge you for sewage usage (not this connection fee) even prior to the time you are connected! That’s a bigger scam IMHO than this capacity charge thing. This capacity charge thing is just how they allocate the cost of bringing a sewage system to the property. Charging for sewage usage prior to connecting is a way to try to coerce owners to connect to sewer (go off septic).

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  10. Kary L. Krismer

    RE: Doug @ 10 – I’m not saying it’s exactly the same as the gas system. I was only comparing it to the cost of bringing gas to your property (and distinguishing between that and the cost of bringing it onto your property). You’re right though that they are also including other things in beyond just the pipe for the immediate neighborhood. Notice I did not say your understanding was wrong, but instead “not entirely correct.” ;-)

    Getting back to the gas thing though, my understanding is you can effectively finance the cost of bringing gas onto your property by agreeing to pay a higher rate for gas. I assume that passes on to a subsequent owner without their knowledge. I’ll have to look into that.

    As to how you know, ideally your agent would explain that to you, but again there is also the contract. Did you have an agent? Typically I go over this every time a contract is signed.

    Finally, again escrow does not bring it up because it’s not an escrow issue. It’s only an escrow issue if you checked “paid by seller” on paragraph 15 of page 1 of the purchase and sale agreement. Escrow only deals with items to be paid by them.

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  11. Jamie

    These real estate brokerages have insurance and so do the title companies. I would seek legal recourse for failure to disclose if that was the case. They will settle if the paperwork is clear and the disclosure is missing. This disclosure must be in writing. If you did not to read your documents….

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  12. Julie Lyda, RE/MAX Northwest Realtors

    The Washington State discloure form covers this issue. Was he provided a Form 17? Was this new construction or re-sale? The burden of disclosure is with the seller, not the real estate agent.

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  13. Dweezil

    It seems that with all the money being passed out when you buy a home, someone should know about this outstanding debt and bring it to the table.

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  14. Kary L. Krismer

    RE: Julie Lyda, RE/MAX Northwest Realtors @ 12 – Thank you. That is a third way that the buyer should know.

    I don’t agree though with leaving the agent off the hook. It’s a choice to be made on Form 21, and thus I think the choice needs to be explained, and the agent is arguably on the hook for the choice if it isn’t explained.

    In that regard I recently heard of an agent being sued for malpractice for checking box 2 of Form 22D, for standard title insurance. The buyer then had a loss that would have been covered if the boxes had been left blank. I would view this as being very similar to that.

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  15. David Losh

    This is another Seattle Bubble OMG! moment.

    Let’s talk about it.

    The listing agent didn’t disclose, the buyer’s agent didn’t have that on the forms? and it was missed in escrow. OK, the money is still owed, it’s 48 payments, you either pay it, or sue the Real Estate agent, and escrow. Welcome to Real Estate.

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  16. Julie Lyda, RE/MAX Northwest Realtors

    Kary, I’m not talking about letting the agent off the hook, but let’s start at the beginning of this transaction to see how this fell through the cracks. We need more information, and we should start with the Form 17.

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  17. Derek Schlicker

    I got nailed with the exact same charge.

    Fortunately (maybe?) for me, the developer and my redfin agent (Kathryn Rion, who did great work) both disclosed it to me. I wasn’t happy about the debt but I got a great deal on my house so I’m not too bent out of shape about it, and I knew about it up front.

    I will say though that this Snohomish/King county agreement is a little shady, but coming from a lifelong resident of the two counties, I can’t say that I’m surprised things like this happen.

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  18. Kary L. Krismer

    By David Losh @ 16:

    This is another Seattle Bubble OMG! moment.

    Let’s talk about it.

    The listing agent didn’t disclose, the buyer’s agent didn’t have that on the forms? and it was missed in escrow. OK, the money is still owed, it’s 48 payments, you either pay it, or sue the Real Estate agent, and escrow. Welcome to Real Estate.

    No way is the listing agent or escrow responsible (unless it was supposed to have been paid by the escrow). Neither entity represents the buyer.

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  19. Kary L. Krismer

    RE: Doug @ 18 – I’ll agree it’s different, but I don’t necessarily see it being unfair. Why should someone in Seattle proper living in a 1950s house have to pay for the sewage system to be expanded? No matter how you cover the cost, it’s going to be unfair to some extent. If you added it to the regular sewer bill, it would be unfair to those living in Seattle proper in a 1950s house and to almost everyone who uses a lot of water for their lawns and gardens. No system is perfect.

    I think the big problem here is that you were not made aware of this prior to the time you made your offer (or simultaneously with signing the offer).

    Interesting point that the median price of new construction should effectively be almost $10,000 higher.

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  20. Kary L. Krismer

    RE: Doug @ 23 – It’s nice that they offered to pay part.

    BTW, it’s not just houses built in the last few years. It depends on when they were connected to sewer. I most recently had a discussion about these charges on a house built in 1975.

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  21. Julie Lyda, RE/MAX Northwest Realtors

    RE: Doug @ 23

    Doug – Was this charge disclosed in the Form 17? Or did you not recieve a Form 17?

    I actually appreciate the topic… It can be a learning experience for all.

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  22. Kary L. Krismer

    RE: Doug @ 26 – If the water pipes in your neighborhood go bad, you’ll likely be charged under an LID. Not sure about the sewer pipes given this capacity charge.

    Again though, the 24 hour short sale has nothing to do with this. You should have been informed of this when you signed the contract–before the seller even saw your contract.

    BTW, if this was a short sale, you really had no choice as to the buyer paying it. At most you could have reduced the price. And the bank wouldn’t probably take that charge into account when determining whether your price was adequate. They sometimes don’t take other things into account, like past due water bills.

    One more thing on the bank not taking this into account. I’m often called by appraisers asking if the sales price included seller financing concessions. I’ve never been asked about a capacity charge or the choice made on Form 21.

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  23. wreckingbull

    In the end, this is nothing more than a poorly managed public utility. The fact that there is even a ‘capacity charge’ at all tells us this. As Doug notes, this all needs to be handled through traditional monthly revenue.

    I had to pay a very expensive ‘capacity charge’ for some raw land I own in Bonner County, ID, and I don’t even have a sewer hookup nor am I a customer of the sewer district. Another example of poor utility planning and management.

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  24. Doug

    RE: Kary L. Krismer @ 24

    Now that’s truly awful!

    Re: your comment about sewer lines in # 26, I was referring to utility owned lines in the ROW. the utility has a responsibility to maintain their facilities. those include utility mains and maintaining the capacity of their system.

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  25. Kary L. Krismer

    By wreckingbull @ 28:

    In the end, this is nothing more than a poorly managed public utility. The fact that there is even a ‘capacity charge’ at all tells us this. .

    Huh? How do you get to that conclusion? Expansion of the system has to be paid for in some manner, and they are choosing to assess new connections. That seems rather logical.

    As to the overall cost, that’s mainly due to US government law which requires the output to be incredibly clean, while Victoria to the north dumps sewage in completely untreated. I could see having high treatment requirements for say the Mississippi river, where people downstream have to drink from the water, but seeming a slightly lesser standard could be used in Puget Sound, thereby saving millions of dollars.

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  26. Kary L. Krismer

    RE: Doug @ 30 – I know the city of Seattle charges for new water lines as an LID. It happened at my condo. Fortunately though I only paid for the front footage on the lot, divided by 20 (10 stories with two units on each side of the building).

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  27. K

    Let’s keep in mind we’re talking about $41 a month for legally collected fees. I pay more than that a month in Starbucks drinks alone. Or a single dinner out with my girl (or 2/3 of a dinner out with the whole household).

    The OP is complaining because he didn’t know about the fees, and nobody told him. Whose fault is that? MUST BE THE GUBMINT. Not, you know, the self-interested, profit-driven realtors and seller (not a criticism, just a natural fact) in the transaction who failed to disclose what they, in all ethical honesty, should have. OTOH, LTBB and RTFM.

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  28. Kary L. Krismer

    By K @ 33:

    Let’s keep in mind we’re talking about $41 a month for legally collected fees. I pay more than that a month in Starbucks drinks alone. .

    If you’re drinking that much Starbucks, you’re contributing to the need for an expanded sewage system! You should pay too! ;-)

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  29. T. Y. Lee

    Well, I think I need to go re-read my contract and see if I am on the hook for this charge, since I’m buying new construction. Thanks for the heads up! The thing is, the price of my house went up by $5K (to utilize gas, which many buyers prefer), so I wonder if they had already accounted for this other fee in the house price. I hope so, anyway.

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  30. No Name Guy

    Kary has hit the nail on the head on this in reference to being more or less like a LID. For those that don’t know, LID = Local Improvement District = (in common vernacular) an Assessment. A specific improvement is done that provides a quantifiable benefit to specific properties. Those properties that benefit pay for said specific improvement. To the person in Bonner Idaho – will your property “perc”? Are septic systems even allowed? If not, then it’s worthless for anything other than timber or grazing land without sewer service, for example.

    This capacity charge is more or less a LID on new connections, only instead of being assessed via the county treasurer, its “merely” a bill from the utility. I’ll agree with Doug that it IS somewhat shady in the sense that with a LID / Assessment, there is a specific PUBLIC record, by property, that will appear in a Title search so prospective purchasers will have this disclosure – no surprises. In this case, as it turns out, it appears the disclosure failed for what ever reason, which SEEMS to be a big part of the gripe on Doug’s part

    As to the fairness issues – I can totally see a 1975 house having to pay this (as mentioned by Kary). In fact, at some point, I’ll pay it on my 1962 built house…..once I switch from being on a septic tank to having sewer service. In some respects, I can hardly wait to get sewer up my street – I won’t have to worry about digging up my back yard every few years to pump out the tank – a nasty task if ever there was one. I’ll take the extra monthly bill to “flush and forget”, but that’s what works for me.

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  31. me

    Larger question: what is it with the US and the bizarre situation of billing? I have a friend who’s just been through that – his Dr charged him $5k for a procedure he never got… he went to court, and got forced to pay… should I just stop working and start sending folks bills instead?

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  32. Kary L. Krismer

    RE: No Name Guy @ 36 – I only brought up the LID to show that some utilities do charge you separately for updating the system. It’s not included in the usage fee.

    When you do connect there will be other charges too! The local sewer district may charge you their own fee (not sure how that’s paid), and of course you’ll have to pay to ditch the pipe to the connection. Those charges can easily double the cost of connecting to sewer. So pump that septic tank frequently! (And next time invest in a riser or two to make the job easier.) If I had septic, I’d want it to last as long as possible.

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  33. ARDELL

    Once again Kary is technically correct and yet oh so wrong all at the same time. The little check box on page one of Form 21 (main Purchase and Sale agreement) only says who will pay “assessments” without defining in any way what those assessments may be.

    While it is true that disclosure falls to the seller and not the agent…that logic takes a twist (and hopefully Doug’s pursuit of this issue will bring this to light) when the agent by checking a box obligates a home buyer without disclosure of what they are “assuming” as to “assessments” as a one word catch all. To those reading, this checkbox is relatively new in real estate contracts, and while attorneys deemed this one line resolved an issue…it actually made it MUCH worse for home buyers. Only an attorney would think it resolved anything. Speaking of the attorneys who put it there and not Kary, though Kary would rightly agree with all attorney type things…he being more of an attorney than a real estate agent.

    Apologies to Doug for taking this on a slight tangent re sewer assessments in King vs Snohomish. Within King you often have a mix of Local Municipality and County charges mixed together when talking about sewer capacity issues.

    Example from last week. Kirkland just north of 85th in Rose Hill. All of the homes are on septic and have been since they were built in the late 50s and early 60s. Builder puts in 4 or 5 homes at the end of the street. Should the builder be charged for the sewer line down an entire street and up to the land where the new homes will be? Should the builder pay for public sewer lines all the way from 85th past 40 homes to the new houses being built?

    The obvious answer is no. There are two ways to handle this. One is called “late comers” where the builder does pay, but gets partial reimbursement every time one of the 40 homes on the line connects to the public sewer line that the builder paid for in advance. The other answer, which applies to the neighborhood I am addressing, is called “emergency sewer” and the City pays for it and attaches a many thousands of dollars monster lien on every home along the line…but…they are still on septic! :) This is a complex issue. The County doesn’t even get involved until the home connects to that sewer line…and still there is a $15,000 lien on the house to be paid.

    So when you buy one of these older homes on that street, the real estate and escrow part is that the $15,000 LIEN has to be paid by the seller in order to give the buyer “clear title”. BUT the home is still on septic. If the buyer elects to connect the house to that line, the buyer has to pay for that connection to the City along with permit and contractor fees…and then…the long term County cost kicks in on top of that.

    Escrow only deals with liens and the lienable utility aspects of a home sale. Utility bills in and of themselves are rarely if ever part of the home buying and selling process. When we go in the kitchen and turn on the gas cooktop, we do not “disclose” that there will be a gas bill after you own the home to pay for that gas you will be cooking with, nor does escrow pay the previous owner’s gas bill up to the day of closing in areas where gas is not “a lienable utility”…as is the case in most areas.

    Adding more mud to this issue than clarity, I understand. But in King County ANY home built after 1990 likely has this issue and it is just handled “in due course”. In fact if you check the King County site it recommends that owners NOT pay these as “assessments” in full, but that they pass the extra monthly charge on to the buyer of their home.

    Sorry to not have links…am still on vacation in LA until tomorrow. The short of it is the up front cost of the connector pipes to provide capacity usually must be paid to the local municipality and are actual liens to be cleared by escrow when a home is sold. The ongoing capacity charges paid to the County are more often passed as a monthly charge from owner to owner and escrow generally only pays for the amount up to the date of closing, and not the full amount that was spread out over 15 years or so. If you are buying a newer townhome in Seattle, as example, you are likely getting this long term payment arrangement. It is very rare for the seller to pay it off at closing.

    You will not find the answer to sewer charges for the home you are about to buy on a blog. You will often not find them out in escrow either. You have to go to the City AND the County to get all of the answers…even if you are buying a home that is on septic vs public sewer. Odd…but true.

    Due diligence is required.

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  34. Kary L. Krismer

    By ARDELL @ 39:

    Once again Kary is technically correct and yet oh so wrong all at the same time. The little check box on page one of Form 21 (main Purchase and Sale agreement) only says who will pay “assessments” without defining in any way what those assessments may be..

    Where I first indicated it was choice 15, I also indicated the paragraph of the purchase and sale agreement that defined the term.

    the client’s fault for not reading the Purchase and Sale agreement (Form 21, page 1, paragraph 15 and page 3 paragraph H.)

    In case you haven’t noticed, the 2nd page and on of the P&S defines many of the choices on the first page. To say it’s an undefined term is absurd.

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  35. Lily

    So if King County’s population increased and it needs a new school building, would it charge $10k to each new tax payer in the region? Of course not, the cost would be spread over many years over all tax payers.
    If AT&T needed new cell towers to serve more customers, would it charge $10k to each new customer? Of course not, it would use the new revenue to pay for the infrastructure over time.

    I’m sure this sewer capacity charge decision was made to appease existing home owners and voters. The decision to not charge the developer was probably due to lobbying by developers.

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  36. Jamie

    Agents have a fiduciary duty under WA law. They do not get let off the hook if they are asked about any obligations that come with buying the house and the agent does not complete the required diligence. Agents cannot just ignore these things. The forms are not the end all be all. Ask your agent to investigate any obligations that come with being an owner. An agent should earn their commission. First it was the record companies, soon it will be the publishing industry, and on the publishers heels will be the real estate commission (of course, there will be exceptions). Fee based services will be the future for realtors.

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  37. John Bailo

    I was looking at a listing in Kent yesterday in the 150K to 200K range.

    There was one nice looking home, but then buried in the description it mentioned that the buyer would be liable for a “93K” sewer charge. I assume that means $93,000 making the price of the house almost a third more!!!

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  38. Kary L. Krismer

    By Lily @ 41:

    So if King County’s population increased and it needs a new school building, would it charge $10k to each new tax payer in the region? Of course not, the cost would be spread over many years over all tax payers. .

    Actually there are charges associated with new developments. They just are not charged to the end buyer like these charges.

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  39. Kary L. Krismer

    By Jamie @ 42:

    Agents have a fiduciary duty under WA law. They do not get let off the hook if they are asked about any obligations that come with buying the house and the agent does not complete the required diligence. Agents cannot just ignore these things.

    I would agree, but that duty does not flow from being a fiduciary. It flows from the standard of care in filling out forms, in this case, by the buyer’s agent.

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  40. Kary L. Krismer

    By John Bailo @ 43:

    I was looking at a listing in Kent yesterday in the 150K to 200K range.

    There was one nice looking home, but then buried in the description it mentioned that the buyer would be liable for a “93K” sewer charge. I assume that means $93,000 making the price of the house almost a third more!!!

    I would assume they meant $9.3k, unless maybe they left the water on for a couple of years, and didn’t pay their bills.

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  41. John Bailo

    RE: Kary L. Krismer @ 46

    Ok.

    Normally, K means 1000, and so 93K means 93000.

    But I do not know this strange language you realtors speak.

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  42. TeacherGreg

    Lets not forget the surcharge on the overcharge…standard really.

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  43. S-crow

    This is really not a utility issue per se but a disclosure issue with new and existing property. We close new homes and new developments and take the time to let people know about the sewer capacity charges and what it means. However, every agent that sells any property should know how sewer capacity charges impact their clients.

    1) Any property in the King County Sewer service area connected after Feb. 1st 1990 (from King County website) is subject to a sewer capacity assessment(paid over a 15 yr period).
    2) Capacity Charges do not show on the Title report, however, they are commonly referenced on the title report as notations for “potential assessments.”
    3) As matter of routine escrow at our company, we order Sewer Capacity Statements on ALL existing and new property on transactions we are involved with. ALL.
    4) If the buyer has assumed the possible assessments by checking the box on line 15 of the Purchase & Sale Agreement (NWMLS Forms) and we have the Sewer Capacity charge statement showing an amount owed, the statement is then provided to the buyer to review at signing.
    5) If the seller pays, then the total amount is paid from their proceeds.

    ~S-Crow

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  44. Kary L. Krismer

    RE: Doug @ 50 – Assumed probably isn’t technically the correct term. “Subject to” would probably be better. If I get a chance I’ll try to look up the applicable statute/ordinance.

    The biggest problem I have with this program is the lack of automation. There’s no website you can go to which would give you even limited information, like: “Is the property currently subject to a capacity charge.” I can see why you might not be able to get a balance on-line, but you should at least be able to find out if there is one.

    BTW, except where a buyer negotiates the payment of the charge, I doubt it’s ever paid off early. I don’t think they give you any kind of a discount for doing so.

    As to your comment about LID, there the shortcoming for my condo was the water pipes were put in sometime between 1900 and 1910. That was perhaps apparent though, since I was right across the street from the Stimson-Green Mansion. ;-)

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  45. wreckingbull

    By Kary L. Krismer @ 31:

    By wreckingbull @ 28:
    In the end, this is nothing more than a poorly managed public utility. The fact that there is even a ‘capacity charge’ at all tells us this. .

    Huh? How do you get to that conclusion? Expansion of the system has to be paid for in some manner, and they are choosing to assess new connections. That seems rather logical.

    I completely disagree. Incremental capacity should be paid for by regular revenues. The reason they now choose to apply special assessments to new(er) connections is that they have not properly planned the system. Your waste stinks just like a new homeowner’s waste stinks.

    By the way, comparing the outflow of Puget Sound to the outflow Straight of Juan de Fuca is not accurate in any sense. Very different dynamics at play.

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  46. Kary L. Krismer

    By wreckingbull @ 52:

    By Kary L. Krismer @ 31:
    By wreckingbull @ 28:
    In the end, this is nothing more than a poorly managed public utility. The fact that there is even a ‘capacity charge’ at all tells us this. .

    Huh? How do you get to that conclusion? Expansion of the system has to be paid for in some manner, and they are choosing to assess new connections. That seems rather logical.

    I completely disagree. Incremental capacity should be paid for by regular revenues.

    That is “in some manner. I would consider that very unfair because existing users would continually be paying for new users.

    The reason they now choose to apply special assessments to new(er) connections is that they have not properly planned the system. Your waste stinks just like a new homeowner’s waste stinks.

    There’s no evidence of that. Expanding the system costs money. As you note, they could just charge everyone more.

    By the way, comparing the outflow of Puget Sound to the outflow Straight of Juan de Fuca is not accurate in any sense. Very different dynamics at play.

    True, but that doesn’t mean that they couldn’t have some lesser standard for discharging into Puget Sound compared to discharging into Lake Washington, as opposed to discharging into the Mississippi River at St. Louis. Having the same very high standard everyone is wasteful.

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  47. Basho

    Accommodating new development was the sole reason for the expansion of the King County Sewage system. With more efficient fixtures and appliances, water use per household has generally been decreasing. While the capacity charge is not perfect, it is certainly more fair than asking all ratepayers to pay for projects that principally benefit new connections.

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  48. Kary L. Krismer

    The statute which authorizes these capacity charges is RCW 35.58.570.

    http://apps.leg.wa.gov/rcw/default.aspx?cite=35.58.570

    That statute allows it to be collected the same as water lien under RCW 57.08.081.

    http://apps.leg.wa.gov/RCW/default.aspx?cite=57.08.081

    That lien has priority over all other liens except real property taxes. You don’t have personal liability for either, so the word “assume” is really inappropriate, as is the title Tim gave this piece! ;-)

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  49. wreckingbull

    RE: Basho @ 54 – Having adequate wastewater treatment capacity benefits all connections equally, not just new connections. If we are just talking about laying the new lines to new neighborhoods, OK, yes, the developer/new homeowner should bear the brunt of the cost, and that cost should be paid in full when the home first sells.

    This is not what we are talking about with the KC capacity charge. Revenue from this additional charge goes largely to wastewater treatment plants. Kary may have a point about standards, although I have never seen evidence that we are overtreating our wastewater.

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  50. ARDELL

    RE: Kary L. Krismer @ 40 -

    Kary…don’t know who you are quoting in the 2nd quote there. Pretty sure I would never say “it’s the client’s fault…” double checking, but it just doesn’t sound like something I would say. I don’t blame my client’s for things like that…ever. I think you may be quoting yourself and answering yourself.

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  51. Kary L. Krismer

    RE: ARDELL @ 57 – That was me quoting what I said when I referenced what part of the P&S contract applied. I was talking about a choice to be made and later a description of that choice. The full sentence was:

    If that wasn’t explained to the buyer, it’s the agent’s fault to some extent, and the client’s fault for not reading the Purchase and Sale agreement (Form 21, page 1, paragraph 15 and page 3 paragraph H.)

    I’m not sure exactly how I would divide fault between a client and an agent in that instance. I think clearly the agent should bare the bulk of the fault, but the client isn’t totally off the hook. That’s a real slippery slope when you start letting people off from contractual terms because they didn’t read them or didn’t understand them.

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  52. David Losh

    RE: Doug @ 23

    My comment was a reference to what has happened to this thread.

    Of course people should be aware of the sewer capacity charge, and you should let your agent’s Broker pay for all of it. It is one of my very pet peaves about Real Estate agents, who are supposed to know how this works, but don’t do the job.

    This shouldn’t have been a surprise, but it is, in more cases than there should be. It has been going on a very long time, so it should be a standard practice issue by now.

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  53. David Losh

    RE: Kary L. Krismer @ 46

    sewer line charge, not uncommon.

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  54. David Losh

    RE: Kary L. Krismer @ 58

    Many properties have already paid off the sewer capacity charge.

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  55. phil

    Why did they do it this way? Because there where was no way in hell that current rate payers would pick up the huge tab for a bunch of late comers to the system.

    Your REA should have had this info available before you even made an offer.

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  56. Kary L. Krismer

    By David Losh @ 61:

    RE: Kary L. Krismer @ 58

    Many properties have already paid off the sewer capacity charge.

    It’s a charge paid over 15 years. It’s not based on the age of the house, but the time of the connection. That’s been made clear many times here. Not sure how my post 58 indicates that might not be the case.

    Do you think the life of a house is only 15 years?

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  57. Kary L. Krismer

    By phil @ 62:

    Your REA should have had this info available before you even made an offer.

    Not necessarily the amount, but an estimate of it, or at a minimum a brief description of the system. And where you think it might be zero, you should always disclose that it still might exist (e.g. the 1975 house connected in 2000.)

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  58. Carey

    Sounds like something real estate agents should help buyers write into the purchase agreement. I know our agent had the builder/seller pay for our “sewer costs” prior to closing.
    I did not know at the time what she was talking about…Nov 2007 new home in King County.

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  59. David Losh

    RE: Kary L. Krismer @ 63

    because you want the client? to know the specifics? or that they need to ask?

    That’s why this is an agency State. If you are an attorney you get get away with not being forth coming unless the client specifically asks.

    It can be paid at any time, in full, and in this case it’s $2K? What was the total due? where in the payment process is this property? You don’t know, but here you are.

    The agent’s Broker should pay.

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  60. David Losh

    RE: Carey @ 65

    Exactly right of your agent, I have done the same, back in the day.

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  61. Kary L. Krismer

    RE: Carey @ 65 – That’s one of the ways that a builder can negotiate price without it being publicly telegraphed when the deed records. It’s sort of like doing free upgrades, but it’s cash.

    In a way though it’s sort of like paying points to pay down an interest rate. With points if you sell or refinance within the first few years, you lose most of the benefit of the points, and it likely cost you more money than what you got in benefit. With capacity charges it only benefits you fully if you keep the house a long time, because surprisingly you’re unlikely to get much more for it with the charge fully paid off. You should get more, but you’re unlikely to. I don’t think I recall a single listing which said: “Capacity charge fully paid.” Nor have I seen an appraisal which indicates a difference in value from the comps because the capacity charge was paid.

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  62. Kary L. Krismer

    By David Losh @ 66:

    RE: Kary L. Krismer @ 63

    because you want the client? to know the specifics? or that they need to ask?

    That’s why this is an agency State. If you are an attorney you get get away with not being forth coming unless the client specifically asks.

    It can be paid at any time, in full, and in this case it’s $2K? What was the total due? where in the payment process is this property? You don’t know, but here you are.

    The agent’s Broker should pay.

    The first three questions have nothing at all to do with the fact that the fee is sometimes paid off. But in any case I’ve said repeatedly that the agent needs to explain the situation and the choice at the time of signing. What is your problem?

    Agency has nothing to do with it, and attorneys are not held to a lower standard. In fact, in filling out the forms agents are held to the standard of an attorney.

    I don’t understand the second to last paragraph.

    As to the third, the agent should arguably pay if they were negligent filling out the form or in bringing the choice to the client’s attention. That this was a short sale, however, makes that less certain because the bank almost certainly is not going to allow the charge to be paid, and the seller either won’t want to or can’t. Clearly you don’t understand real estate.

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  63. Lily

    By Basho @ 54:

    Accommodating new development was the sole reason for the expansion of the King County Sewage system. With more efficient fixtures and appliances, water use per household has generally been decreasing. While the capacity charge is not perfect, it is certainly more fair than asking all ratepayers to pay for projects that principally benefit new connections.

    Should we have new comers to King County and parents of new born babies pay for more frequent bus services, since additional bus service would not be necessary if there was no population increase? No, we expect the additional tax revenue will cover it eventually.

    I can understand charging for the last mile hookup, all home owners paid for that when the house was built, but charging only new developments for upgrades to treatment plants? I suppose it is fair if previous surcharges have fully paid for all existing infrastructure. I doubt that’s the case.

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  64. Kary L. Krismer

    By Lily @ 70:

    I can understand charging for the last mile hookup, all home owners paid for that when the house was built, but charging only new developments for upgrades to treatment plants? I suppose it is fair if previous surcharges have fully paid for all existing infrastructure. I doubt that’s the case.

    Think if it this way. The new plants wouldn’t be necessary, by and large, but for the new connections. Each connection charge goes toward building the new plant which either is necessary, or will be necessary due to the increased connections, but wouldn’t have been necessary otherwise.

    As to the bus analogy, you can’t easily determine who is new and who is old. That’s not the case with sewer connections.

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  65. David Losh

    RE: Lily @ 70

    New development was meant to pay for infrastructure. If you put in 200 homes on a one lane road that serviced 12 homes, then the developer was meant to pay for that.

    It has gotten lost in translation because the costs are just passed on to the consumer. The capacity charge was the same idea for treatment plants that had capacity for rural areas that are now suburban.

    Carkeek is mentioned in this debate a lot, because as the area of Broadview was developed the water run off also over loaded the sewer treatment facility. In Broadview there isn’t a specific developer, or development to collect from. In South Everett, on the other hand, builder developers are ripe targets.

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  66. David Losh

    RE: Kary L. Krismer @ 69

    The agent had the responsibility to ask, and inform. Who pulled the title report? Was it on the title report? Did the agent ask if the sewer capacity charge was paid off?

    A short sale is no excuse.

    The agent’s Broker should pay. They have a client who has asked for $2K they were unaware of. These buyers seem bright enough, but you think it’s a slippery slope for Brokerages to take responsibility.

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  67. David Losh

    The point is, my point is, that you should be asking more questions.

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  68. Kary L. Krismer

    By David Losh @ 73:

    RE: Kary L. Krismer @ 69 -Who pulled the title report? Was it on the title report?

    Have you read any of this thread? The only thing on the title report is that they don’t cover these charges, and how to contact King County to find out if anything is owed. Reading that title report is yet another way the buyer would discover the fee.

    You either are or have been a real estate agent. Why don’t you know that?

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  69. Kary L. Krismer

    By David Losh @ 73:

    A short sale is no excuse.

    It’s no excuse as to informing the buyer about the possible charge. It’s very unlikely that knowledge would have lead to a different result. Presumably the buyer already made the lowest offer they thought the bank would accept, or the bank came back with a higher number than offered. Very unlikely the bank would allow the capacity charge to be paid or that the seller would pay it.

    Let’s put it this way. Let’s say you were negligent and caused an accident that killed someone. If that someone was on their way to see a doctor for assisted suicide to be done that day, the civil damages you would have to pay for that death would likely be quite low, because they were going to be dead anyway. Here the capacity charge was unlikely to be paid even if the buyer had been informed of it. So the result would likely have been the same, so the agent arguably isn’t responsible.

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  70. mukoh

    RE: ARDELL @ 39 – Ardell latecomers paid back to the developer have not existed since the early 90s. They are either collected up front, or paid to the utility district at a per foot charge later by the home owner connecting to an already put in sewer main at a later date. I ended up charging 11 people out 12 upfront $7500 per stub, and included in the sewer main Ts per each one. :) It all ended up cheaper for them than paying $14k frontage fee to Alderwood W&S later.

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  71. Kary L. Krismer

    By David Losh @ 73:

    < These buyers seem bright enough, but you think it's a slippery slope for Brokerages to take responsibility.

    No, I said it was a slippery slope for buyers to be let off for not reading or understanding their contracts.

    Here assuming the standard forms were used:

    Page 1 of form 21 brought this up.
    Page 3 of form 21 brought this up.
    Form 17, if given, brought this up.
    The title report almost certainly brought this up.

    At what point can the buyer no longer say: “I didn’t know?” That’s a tough question, which is why I say it’s a slippery slope.

    All that said, the agent should have brought it up too. That does not mean though, that they should have to pay all or even part.

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  72. Basho

    “Should we have new comers to King County and parents of new born babies pay for more frequent bus services, since additional bus service would not be necessary if there was no population increase? No, we expect the additional tax revenue will cover it eventually.”

    It’s a completely different situation. There is no minimum standard of bus service. More people in King County does not mean more transit service needs to be offered.

    More households hooking up to a sewage system means more sewage will be entering the system. As a society, we’ve decided that all sewage needs to be treated before being discharged into the environment. More sewage entering the system means that more treatment capacity is required to avoid discharging waste untreated into the environment. More treatment capacity costs money. Who should pay for it? Ideally, the people who’s actions resulted in the need for it.

    Not to mention, the additional sewage capacity was pre-condition to the new household existing in the first place. Without the additional capacity, no building permit would have been issued.

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  73. mukoh

    RE: Basho @ 79 – Earthies do not like the sewer treated, they like it natural!.

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  74. David Losh

    It makes no difference to this thread, your comments, or the end result.

    This is another case, another day, of multiple comments of opinions contrary to the workings of the Real Estate industry.

    The cleint was uninformed. The Broker should pay even if it is only good business to pay.

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  75. David Losh

    RE: Kary L. Krismer @ 75RE: David Losh @ 73RE: Kary L. Krismer @ 78

    Wait, I thought you said that it wasn’t on the title report? but then comment that “The title report almost certainly brought this up.”

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  76. James Baker

    This situation happened to me, too. My sudden bill was for a ‘mere’ $800, though. I purchased a short sale where the previous owner had stopped paying King County almost two years prior to the sale. It was not disclosed by the sellers to their agent, was not on the Form 17, was not caught by my agent, and was not caught by escrow. I didn’t hear about this program at all, from anyone, until the bill showed up months later. This bill is not something that shows up anywhere automatically – someone has to basically ask King County what its status is.
    The (generally quite polite and helpful!) folks at the King County Wastewater Capacity Charge program told me that they would in no way go after the previous owner for their unpaid bill. I had thought, after reading the RC carefully, that this was within their power, but they informed me that the county prosecutor had told them that they did not have the authority to do that. They pointed to escrow as the most responsible party for failing to inquire with the county about the capacity charge.
    Escrow acknowledged their fault but refused to pay. My agent was not a King County resident and didn’t deserve to pay. Seller’s agent refused to pay, saying he was deceived by seller. Seller was, of course, long gone. The county wasn’t going to do a darn thing except hold me responsible for the previous owner’s missed payments. Well, $800 was a lot easier than trying to sue somebody…

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  77. ARDELL

    RE: Kary L. Krismer @ 78 -

    Kary, there is no disclosure without an amount. There is no “meeting of the minds” without an amount. You can’t say a home buyer was “informed” and agreed to pay something because of a check box and some boilerplate language that appears exactly the same way in contracts for houses that have a $93,000 charge as it does in another that has none at all.

    The system favors sellers as no one would ever expect a seller to agree to pay all of a buyer’s closing costs without a stated dollar limit. No one would expect a seller to agree to pay an excise tax of some undetermined amount. Yet you seem to think a buyer agreeing to any and all sewer assessments, without knowing if that number is zero or $93,000 at time of offer, is just honky dory. Don’t you see the gross unfairness in that kind of thinking?

    Again, I’m not saying you are legally or technically wrong. But that you are right, and the buyer is asked to do something no one would ever tolerate if it were a seller vs a buyer, is just so wrong that it stinks to high heaven.

    A contract only conveys a meeting of the minds. Without a list of which assessments a buyer is agreeing to pay, and a dollar amount for each item on the lust, you really can’t say the buyer agreed to pay “it”.

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  78. S-crow

    Local title reports show nothing other than notations that there are “potential assessments.” I highly doubt, based upon my experience, that the Title report is read thoroughly by the principal parties to the sale including the agents involved and understand it’s language or limitations.

    For example, I just solved a title issue on a report that a loan officer had in their possession for a month and a half and I received last week and now they are belly-aching about why their deal can’t be closed right away. If they understood the contents of the title report and how it impacts their transaction they would not be panicking at the 12th hour because their lock is expiring and had it resolved within a week or so of the report being generated.

    As a side note: In regards to short sales, it always mystifies me when you have a title report that is messy in terms of liens or judgments and agents give up on it or the transaction before it even starts. It is a gold mine if you have a escrow firm that is proactive in knowing what to do or assessing whether or not the issues are solvable.

    S-crow

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  79. Purple

    Is this capacity charge deductible from federal taxes?

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  80. T. Y. Lee

    Well, balls! Looks like I’m on the hook for a sewer capacity charge (just asked my realtor) but nobody even knows how much it is.

    I totally don’t feel like I’m being screwed. At all. (/sarcasm)

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  81. T. Y. Lee

    RE: Purple @ 86 – Not sure, but the kingcountygov site did mention this: “At any time during the 15-year duration of the charge, you may pay the remaining balance in one lump sum at a discount. If you include the payoff amount in your mortgage, it might provide a tax advantage.”
    But I personally have no idea what that even means. I did send an email to my realtor, to see if she can clarify some of this for me, since I am under contract for a new house and will be responsible for this charge.

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  82. StillRenting

    Thanks for the post, Tim & Doug! This is really helpful information for buyers.

    Are there any more “hidden” costs or fees that may not be fully disclosed in the contracts that buyers should be asking about? I don’t really consider anything that doesn’t list an actual amount owed on a document you sign to be fully disclosed in the paperwork (i.e., a checkbox saying one party or the other is responsible for some unspecified cost isn’t full disclosure, in my opinion).

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  83. Kary L. Krismer

    By David Losh @ 82:

    RE: Kary L. Krismer @ 75RE: David Losh @ 73RE: Kary L. Krismer @ 78

    Wait, I thought you said that it wasn’t on the title report? but then comment that “The title report almost certainly brought this up.”

    Read post 8. The preliminary commitment almost certainly said it wasn’t something they cover. In the example I give there, they tell the buyer how to find out if there is anything owing.

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  84. Kary L. Krismer

    By James Baker @ 83:

    The (generally quite polite and helpful!) folks at the King County Wastewater Capacity Charge program told me that they would in no way go after the previous owner for their unpaid bill. I had thought, after reading the RC carefully, that this was within their power, but they informed me that the county prosecutor had told them that they did not have the authority to do that. They pointed to escrow as the most responsible party for failing to inquire with the county about the capacity charge..

    The charge is “in rem” only, per the second statutory link I posted above. That means it’s a claim against the property only, there is no personal liability. If you don’t pay you can lose the property, but they cannot get a judgment against you to say garnish your wages.

    If your contract said you would assume the charge, there’s no reason escrow would have to check. Tim above noted his office always checks. I think that’s going above and beyond what an escrow is required to do (and would question whether it leads to more or less liability for his firm).

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  85. Kary L. Krismer

    By ARDELL @ 84:

    RE: Kary L. Krismer @ 78 -Kary, there is no disclosure without an amount. There is no “meeting of the minds” without an amount.

    Incorrect on both counts. As to the second, a unilateral mistake does not prevent a meeting of the minds. And in any case, the contract has already been fully executed at this point, so that’s rather irrelevant.

    As to the rest of your post have I said that the disclosure shouldn’t be better? No. Did I complain above that King County’s system wasn’t sufficiently automated to have access to this information? Yes. There is clearly room for improvement, especially if you have agents like David who don’t understand the system and can’t properly warn their clients about what is going on. That’s an entirely different issue, because that’s not the world we live in.

    In the world we live in the agent would be at fault if the situation wasn’t adequately explained, and the buyer would be at fault if they ignored what was likely 4 separate instances where the capacity charge was mentioned, and one of those was a check box indicating that the buyer was assuming that charge! Shouldn’t that raise some flags for a buyer?

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  86. Kary L. Krismer

    By S-crow @ 85:

    Local title reports show nothing other than notations that there are “potential assessments.” I highly doubt, based upon my experience, that the Title report is read thoroughly by the principal parties to the sale including the agents involved and understand it’s language or limitations.

    For example, I just solved a title issue on a report that a loan officer had in their possession for a month and a half and I received last week and now they are belly-aching about why their deal can’t be closed right away. If they understood the contents of the title report and how it impacts their transaction they would not be panicking at the 12th hour because their lock is expiring and had it resolved within a week or so of the report being generated.

    I would agree with a lot of that. For some reason agents find preliminary commitments confusing, and even the title reps often don’t understand.

    I once reviewed a file of another agent where they had three listings from the same owner. The 2 of the 3 title reports had errors in them, which is part of the reason I never use that unnamed title company, but each of them had information indicating that the property could not be sold absent a short sale or other agreement. This was back before short sales were at all common, and I think before the NWMLS had a category for them. There were also updates to the commitments which made the transactions either more difficult, or impossible (e.g. a lis pendens). I’m not even sure the agent ever read any of this information provided.

    Even worse, there are still agents that list a property without getting a title report until the point an offer comes in!

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  87. Kary L. Krismer

    By Purple @ 86:

    Is this capacity charge deductible from federal taxes?

    To do that I think it would need to be considered a tax, and I’m not sure it would be. My guess is it gets added to your tax basis, reducing your gain when you sell. If it were a business property you might be able to deduct the periodic payments. Interesting question.

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  88. Kary L. Krismer

    By StillRenting @ 89:

    Thanks for the post, Tim & Doug! This is really helpful information for buyers.

    Are there any more “hidden” costs or fees that may not be fully disclosed in the contracts that buyers should be asking about? I don’t really consider anything that doesn’t list an actual amount owed on a document you sign to be fully disclosed in the paperwork (i.e., a checkbox saying one party or the other is responsible for some unspecified cost isn’t full disclosure, in my opinion).

    As I noted, that should at least raise some flags!

    But to answer your question, the big one that comes to mind is mechanics liens. Those can be for thousands of dollars and might not be recorded at the time of the transaction. The best way to protect yourself from those is to get the “homeowners” level of title insurance, as I’ve discussed before. That means on Form 22D not checking either box of paragraph 2. As I noted above, an agent is apparently being sued for checking the first box of that form, after something like a mechanics lien popped up after closing.

    The other big thing that comes to mind would be a future special assessment on a condo. There should be information that would at least give you a clue that was likely in the Resale Certificate from the condo association.

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  89. David Losh

    RE: S-crow @ 85

    One thing I have never seen discussed is the importance of a good title representative. It may be that most title reps are just sales people taking orders, but some read the report, discuss it with the plant, and give the agent an opinion.

    The title report can make, or break, a deal, yet it seems it gets over looked.

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  90. David Losh

    RE: Doug @ 96

    I have always thought the developer should pay, and roll it into the cost. It seems very under handed to me, but again, your agent should pay, it should have been discussed.

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  91. David Losh

    RE: Kary L. Krismer @ 92

    Whoa, hold on, this is obviously another point of Real Estate you are attempting to figure out, but you are here dispensing advice.

    That is a great concern of mine about the internet.

    Ardell has once again given you good information that you will ignore, and go on like it should all be different some how.

    “agents like David who don’t understand the system ” you make comments like this so some one will engage you and another twenty comments, best of luck with that.

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  92. Kary L. Krismer

    By Doug @ 96:

    I wanted to simply raise the awareness that home-buyers should be really careful when buying a new home. $52 a month for 15 years isn’t chump change.

    I would agree, and I think it served that purpose very well. I have to say I’m shocked that some agents don’t discuss this issue better at the time of signing the contract.

    Somewhat related, we recently had a client buying a property on septic, and there we gave them not only the capacity charge information, but also the following charges that they would have to pay if and when their septic system failed:

    Special Connection Charge of $6850.80
    General Facility Charge of $2900.00
    Side Sewer Permit of $150.00

    And we obtained a very rough estimate of the cost of running the pipe to the connection.

    That was all for a septic system that appeared to be perfectly fine in an area where two separate septic people said the soil in that area was very good for drain fields. But someday they may have to connect, so we got them the information on the cost.

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