By Blackwell M. Brogden, Jr.
Chief Deputy Legal Counsel
The Real Estate Commission periodically investigates complaints which allege that
licensees have falsely advertised the occupancy levels or number of bedrooms in properties
for sale or rent. The basis of these allegations is that the advertised limits exceed the
design parameters of the on-site sewage system "improvement permit" issued for a
particular property. In other words, the licensee has represented that the property can be
occupied by more people than the sewage system is designed to handle.
When municipal sewer service is not available for a residential building lot, the local
health department evaluates the lot to determine its suitability for onsite sewage
disposal. Typically, the lot owner or builder/developer must apply for an
"improvement permit" for a sewage disposal system; the application proposes a
dwelling with a certain number of bedrooms. The health department environmental health
specialist (EHS) will then determine whether the lot will support such a use. If so, the
EHS will approve a design for a system of suitable capacity, generally assuming an
occupancy level of two persons per bedroom.
Licensees must be alert to these bedroom and occupancy limits in the sale and resale of
all properties or lots requiring on-site sewage disposal systems - not just new homes or
homes under construction. They should also be aware of these limits when renting real
estate; especially, resort property.
If a licensee encourages overuse of a property through his advertising or by other means,
the occupants of the property may overload the system, thereby contributing to its
eventual failure. When the sewage system fails, the local health department can prohibit
further use of the system (and in turn occupancy of the property), in order to prevent
contamination of the surrounding groundwater and to protect the public health. Even if the
system is repairable, lower occupancy limits may be imposed. At that point, the occupants
and owners of the property may blame the licensee for their losses. They may also complain
to the Real Estate Commission.
The position of the Commission has long been that the real estate broker or salesman who
holds himself out as possessing special skills, understanding, and information with
respect to real estate should be informed about any use restrictions on particular lands
with which he is dealing. Thus, a licensee who advertises that a property "sleeps
16" should be certain that any on-site sewage system is in fact designed to serve at
least sixteen people. Similarly, a licensee who advertises a property for sale as having a
certain number of bed rooms should be sure that any on-site sewage system is permitted to
handle that number of bedrooms.
The occupancy level imposed by an on-site sewage system improvement permit like other
forms of land-use control is usually discernable from public records. The health
department maintains records that identify either the total number of bedrooms (at two
persons per bedroom), or the total number of people that the sewage system has been
designed to serve. Be aware that in calculating the number of bedrooms, the sewage rules
state that "each bedroom and any other room or addition that can reasonably be
expected to function as a bedroom shall be considered a bedroom for design purposes."
In the absence of health department records, a licensee generally may advertise occupancy
of the property at the number of bedrooms times two.
CAVEAT: The Real Estate License Law prohibits misrepresentation, omission or concealment
of material fact; a course of misrepresentation through false advertising; and improper,
dishonest and fraudulent conduct. Intentional or negligent misrepresentation of the
occupancy design limits of a property served by an on-site sewage disposal system violates
the License Law and may result in disciplinary action against the licensee.