House flooded after contract but before closing

[Hoi L.]

First post and hopefully this site will steer us to a path of successful real estate investors.

A quick few facts about this house: a large house (4+bedrooms/1.5 baths with central air: a perk in this section of neighborhood) located in a small low-middle income town outside a large city in the Northeast that is projected to provide a +cash flow for years to come.  It was nicely updated, priced right, and it received multiple offers within 5 days of listing; we waived mortgage/inspection contingencies with closing date on 9/14/21.  It was affected by Hurricane Ida, and the street was flooded with up to 8 ft of water.  This house's basement was flooded to the ceiling, submerging the oil burning furnace, heating oil tank, security system panel, electrical panel, and water heater.  We took a look at the house yesterday (entire block was closed off from traffic for the clean up and dumpsters, etc), and not only is the electrical panel cover rusted, but I am sure the HVAC ductwork/furnace/water heater were also all submerged, along with the central AC condenser outside the house.  In addition, we also noticed a wall is "bulging" with signs of the foundation behind it pushing on the drywall/cement.  When it was pointed out to the seller during the walkthrough yesterday, he answered that he will "tap it back in", as if he has done it before.

In the seller's disclosure, he marked "No" on any history of walls/foundation shifting, movement, deterioration, past or present.  In addition, when he answer "Yes" to any history of seepage/water to the basement, he stated that "street flood due to clogged street stormwater, June 2021".  From the topography, it is obvious that the storm water flood on the street was due to a heavier than normal thunderstorm and not due to "incidental clogged" storm water drain.  The same street was flooded in 6/2021, as later found out by us this past few days.

With many components to replace/restore back to "agreement of sale" date condition, (electrical panel replaced/inspected; basement windows grouting/pointing washed off; HVAC system; all the wood/drywall, etc), it is likely he won't be able to get everything done by closing date 9/14.  With all that's happened, I am not sure I want to deal with a house that has just been completely flooded in the basement (8 ft high water!).  

Do you think I should back out and get my good faith deposit back and if so (I am 90% wanting out), do I have any legal recourse?  Do I use "Force Majeure Clause"?

Thank you for all and any advice.

[Zee Abbas]

Any property that has flooded twice in the last 3 months, will flood again in the near future. Did the property have flood insurance? If not, the damages will not be covered by the standard home insurance policy. Future flood damage will heavily eat into your cash flow and give you headaches. I would pass on it and focus on a different property.