Before the contractor pours the basement floor, he digs trenches along the inside perimeter of the basement. After adding a layer of gravel to these trenches, he positions drain tile in them, then adds more gravel. This acts as a natural filter to keep sediment out of the drain tile. Since the trenches are beneath the level of the basement floor, when the contractor pours the floor, the trenches get covered with cement. Once the floor is finished, it will be flat and smooth, giving no indication that drain tile lies beneath.
The name can be confusing, but drain tile isn't really tile at all. It's a flexible 4-inch pipe with perforations along the length of one side. A nylon mesh hose covers this flexible pipe, and filters out dirt and debris. The beginning and the end of the perforated pipe exit the foundation in same place, into a sump pit.
When ground water rises beneath the basement floor, it filters into the perforated pipe and runs to the sump pit. In the pit, which holds a large bucket and a sump pump, the water level rises until it reaches the pump float, which turns the pump on and pumps the water out of the pit and onto the ground above.
When the drain tile is operating as it should, it alleviates groundwater pressure beneath the basement floor and prevents leaks into the basement. Interior drain tile usually accompanies the installation of exterior drain tile, unless you install it later.
If the basement doesn't leak, it is a good candidate for finishing to serve as additional living space.