Party Sewer Line issues in Portland Oregon

Recently we were approached by the city regarding our sewer hook-up. It is located on a ‘party sewer line' where it connects into our neighbor's sewer line before entering to the main sewer at the street. It used to connect to the house on the other side of ours as well before those owners ran a new line in 2007 (which is when we first learned of the party sewer line).

The issue was 'caught' (although they have known about it for years) by the city when our other neighbors with the existing party connection had a sewer scope inspection due to the sale of their home.

The city is now saying that because they are the 'host' and we are the 'guest' in the party line hook-up (which doesn't make since as we are the middle house and it would be more likely if all the 'poop' (most literally) ran to a middle source before going to the sewer main in the street).

According to the city, we have three options to complete before January 2010:

• 1) fix the sewer line at 100% our cost... including a new connection into the city main. That alone will cost us $3,800 (mind you the neighbors don't have to shell out a dime as they are the 'host') .
• 2) Provide a sewer video scope that proves that there is no environmental hazards (we know that it is unlikely that a 65 year old sewer line is free of issue, so we'd simply be paying $100 more than the $8,500+ bill they are asking of us) or
• 3) get the neighbors to allow an 'easement' . First of course, I would require that the city can prove that the sewer line is in fact encroaching onto their property, rather than their line adjoining ours before going out to the street.

Short of bending over and paying for all costs, does anyone have any legal words of advice or personal experience in the matter? Understandably, our neighbor in the midst of selling her house has been avoiding my queries about the situation (who can blame her? She just wants to sell the house, not be burdened with updated an existing deed). I'm leaning towards option #3 for the ‘cleanest' possible solution to this situation. It is my understanding that encroachments (or would that be a 'prescriptive easement'?)such as these become easements over a certain period of time even if the encroachment is undetectable (and thus far unproven).

Here is one of the links that the city provided in the letter. In this link, the city immediately admits that they do not have accurate records of the city sewer lines.

Sadly, this is a situation that the city or our Realtor could not have warned us about prior to us purchasing the home in 1997 as their ‘Sewer Program' did not even take effect until 2007.

Any information on the matter would be most appreciated.