HUD home with undisclosed cesspool

[Bob Adams]

i(owner-occupant) am in the process of losing my emd(earnest money deposit) due to my cancelling the contract on a hud home i won the bid on -- i had everything in place on my end, loan, appraisal, etc., and was waiting on hud to do the arizona state required septic inspection(done by seller, no exceptions, without inspection there can be no transfer) -- so hud was dragging its feet, not doing the inspection, time runs out, and they want $375 for a 2 week extension! -- thats right, we're ready to close, except they're not ready, and they want me to pay for an extension -- about this time i hear from neighbors that the home most definitely has a cesspool, illegal in az since 1976 -- but get this, hud listed this on the mls, and hudhomestore, as having a septic system -- had it said "cesspool", i never would have bid -- even "unknown" would have sent me running -- now i know hud homes are sold "as-is", but this seems like deceptive advertising, no??

[Greg H.]

Several things here:

Hud is exempt from any disclosures 

Neighbors are usually wrong. If cesspools are not legal since 1976, the chance is about zero that the house has a cesspool. The proptwas sold on a FHA loan or it would not ever become a HUD home. In that case, a septic inspection was done at that time

HUD is not going to coordinate a septic inspection. You as the buyer along with your agent is going to have to get it done

You will need to file the required extension and pay the extension fee or HUD will terminate the contract

As an owner occupant, you will receive your earnest money back if your loan is denied for not having a septic inspection