How far does "We don't know nuthin' " - i.e. As-Is, Where-Is, No Disclosures - extend?

[Karin Crompton]

I realize this may vary by state and by entity, and that in the end it's probably a question for an attorney. Still, I'm interested in hearing some BP members' thoughts.

We had an offer accepted on a bank-owned property this past week, with well and septic inspections as our only contingencies. While doing a little research at City Hall and at the regional health district for the upcoming inspections, I discovered some really serious issues - most notably, the leaching fields for the septic system are located on the adjacent property. The owner got approval for the fields in 1989 with the stipulation that he make that portion of the land a permanent part of this property (it appears to be 2 family members who lived next door to each other, so I think they all shrugged and blew that part off). I found no record indicating that he did so, and the current property map doesn't reflect it.

We brought this concern plus two others to the listing agency, which completely blew us off. We got, "The property is being sold as-is, where-is and the seller won't make any repairs." And then they said they would cancel the transaction based on our email. (The 2 other concerns are that the septic tank, at 1,000 gallons, is for a 3 bedroom house - which is what the health district has on record - while the property is listed in town records as a 4, for which the health district would want a 1,250+-gallon tank; and the garage is actually located on the adjacent property as well, so the house, being advertised as a SF with 1-car garage, does not technically have a garage. It is in terrible shape and a tear-down. But we would not be able to obtain a permit for tear-down, as per the Building Dept.)

This isn't our first REO and we understand the risks associated with as-is, where-is. We've bought property with no disclosures before. But this seems extreme. I have seen bank-owned property that disclosed info regarding the septic or an oil tank removal, that kind of thing.

I believe the garage and 3 vs. 4-bedroom scenario could be handled fairly easily. But the leaching field situation is major. It's on another freakin' property!! If by chance the bank can actually ignore this fact - which, if not illegal, seems highly unethical - what about the Listing Broker? Once made aware of the situation, how can the broker not disclose it? This is an enormous material fact. Oh, and one other thing - the listing office has not even brought our concern to the seller. They answered my email w/in 15 minutes of my sending it, with their knee-jerk "tough luck" reply. I am still attempting to get them to present the concern and remedy request to the bank.

Your thoughts?