Can you get a mortgage on a home with a shared well?

What is a shared well?

A shared well is one private well that supplies water to two or more homes, often neighbors on a subdivided lot or homes that were once one property. It's different from a community water system run by a town or utility. The agreement between the owners decides who can use the well, who pays for repairs and what happens when one owner sells.

What do conventional lenders look for?

Fannie Mae's Selling Guide says homes on private wells are eligible when public water isn't available. A well that isn't on your lot is fine if you have the right to use it and there's an adequate, legally binding agreement covering access and maintenance. The lender, title company and appraiser will look for that agreement, usually recorded with the deed.

What does FHA require for a shared well?

HUD's Handbook 4000.1 says the lender must confirm a shared well:

• serves homes that can't feasibly connect to public or community water;
• can supply each existing home with at least three gallons per minute at the same time over a four-hour period (or has enough pressurized storage to make up for a lower yield), shown by a pumping test;
• provides safe drinking water, with a test when HUD's well testing rules call for one;
• has a valve on each home's line so water can be shut off to one home without cutting off the others; and
• serves no more than four homes.

When a test is needed, it must be done by a disinterested third party, such as a commercial lab. The buyer, seller or anyone else with a stake in the sale can't collect or carry the sample.

What has to be in the shared well agreement for FHA?

HUD lists the provisions an acceptable agreement must include. Among them, the agreement must:

• bind the owners and future owners and be recorded in the local deed records;
• allow water testing by the local authority at any owner's request;
• keep water flowing to the other homes if the owner of the well's lot no longer needs it;
• limit use to normal household purposes and bar new connections without everyone's consent;
• keep septic system parts at least 75 feet from the well;
• set easements so owners can reach the well for repairs, testing and upkeep;
• let any owner fix an emergency, such as the well not delivering water, if the others aren't there; and
• spell out how owners share the cost of electricity for the pump, repairs, testing and replacement parts.

Many older NH agreements were written before these rules, so it helps to have the agreement reviewed early. Fixing one can mean every owner signing an amendment.

What should I ask the seller?

• A copy of the recorded shared well agreement and any amendments.
• How many homes the well serves and where the shutoff valves are.
• Recent water test results and any pumping or yield test.
• Repair history and how costs have been split in practice.

You can often find a recorded agreement yourself. See how to look up a deed at the NH registry of deeds. For testing, see when a well water test is required and the well and septic guide.