Foreclosure - Seller buried huge quantities garbage on property

[Todd Nadeau]

I recently bought a [Federal Agency] foreclosed property. The property is on a huge city lot (small acreage) and was a "hoarder" house, and according to the agent, the bid for the external cleanup was substantial, but was "completed". I talked to the city police who frequented the property and they said that the piles of garbage were as high as the eves of the roof. This garbage appeared gone when it was listed in the MLS.

The next day after closing, a neighbor came by pleased that someone was finally going to fix up the house.  She informed me that the seller got rid of the garbage by excavating a large, deep hole on the property about 30' from our irrigation well and burying it.  The area that appears recently excavated is very large (size of a house).

Now, I will have to excavate and perform environmental clean-up, testing etc., and also disclose it when I sell.

I would think that this is illegal.  Am I wrong?  The Seller was a Federal Agency, and the Asset Manager is a large national one, so one would think they wouldn't do it if it wasn't legal.  I am also being intentionally vague as I don't know the implications yet.

Not knowing what was buried has me worried that I unwittingly just made a purchase that can topple everything I've worked for.

- Do I have any options at this point to get the Seller or Asset Manager to do the cleanup?  

- Should I immediately put this into an LLC, not knowing what costs could be lurking there that could send me into bankruptcy? I have a $1 million umbrella, should I increase it? Could I even be protected at this point?

I sort of wish the neighbor never told me.