Verify Recapture Agreements

Patrick L. O'Toole, Senior Editor
April 1, 2003
Professional Builder

That water and/or sewer main running near the property you want to buy is often a blessing, but trouble could lurk there, too, says Tom Stephani, a builder in Crystal Lake, Ill.

Before getting too far along in your pro formas on a parcel, remember to ask local officials if any "recapture agreements" might adversely affect the cost of tapping into that line.

In suburban infill locations, a previous developer often will foot the bill for a new water line under the proviso that it be entitled to "recapture" the costs of laying that pipe from subsequent users.

These costs can be significant, upward of tens of thousands of dollars, sometimes with interest on top. And these agreements often are not recorded on the deed.

"Hopefully the city engineer will tell you, but they might be new and not be aware of it unless you ask them to check," Stephani says. "But I guarantee that the guy who paid the money is watching it, and he’s going to point that out as soon as he sees anyone tapping into the line."

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