Seller Did not Disclose shared septic

[Casey Young]

Please Help! We were trying to buy a lake cottage to rent as a VRBO. We came to an agreement on price, went to inspect the septic only to have our people not be able to find it? Now the Seller and there agent is disclosing that its a shared septic that is connected to a abandoned house oh and its not even on there property. The whole things is starting to smell like a bad deal and I want out. (no pun intended) Sellers agent is saying I am out my earnest money if I Bail; since even though it wasn't disclosed they are trying to remedy the situation? This sounds bogus to me being that we have already caught them in one lie. Your thoughts? Thank you in advance.