YARMOUTH — The Yarmouth Water District is offering an apology, $4,000 and a promise of better communication to settle a dispute with North Yarmouth over the demolition of a house.

The district, which serves Yarmouth and North Yarmouth, bought a house and 17 acres of land on Baston Road in June because the property is uphill from three of the district’s four wells. The district wanted the property to protect the quality of its water supply because the land could have been developed into house lots, with oil tanks and septic systems.

The district tore down the house on the property in July, concerned that it might be liable if someone got injured inside the structure after the land was opened to the public for passive recreational uses.

In a letter to the North Yarmouth Board of Selectman, the district said it learned after the fact that it needed a demolition permit and was required to notify the Yarmouth Historical Society of its plans to tear down the house,

It received a permit for the demolition five days after the structure was torn down.

“The district made an inadvertent mistake here,” William Reinsborough, the chair of the district’s board, said in a letter sent this week to the North Yarmouth selectmen. “We admit our mistake and are willing to pay a reasonable penalty.”

The payment would represent a fine and $1,500 for the town’s legal fees, the letter said. In addition to the apology and regular meetings between the district’s board and the selectmen, the district also offered to allow an archaeological excavation on the land.

The letter said the district is eager to avoid the potential of going to court with North Yarmouth to resolve the matter, but Steve Palmer, the head of the Board of Selectmen, said “the legal machine has started.”

Palmer said the selectmen probably won’t take up the proposed settlement until September and, in the meantime, will move forward with legal action to impose a fine on the district.