Home with undisclosed Cesspool

[Jerome Morelos]

I’m in a “sticky” situation where I could potentially lose my earnest money (5k) due to me potentially backing out of the deal.

I’m in contract on my first owner-occupied property that was listed as “public sewer” but we come to find out it was on “septic” which the sellers were able to get inspected right before the 10 day inspection contingency expired. We requested the inspection report but the seller’s agent dragged their feet and took a while to send it. With the inspection contingency expiring, we finally received it and come to find out it also had a cesspool that was 90% full and needed replacement. This was not disclosed at all by the seller. Septic company quoted me 7-8k to replace the cesspool. The septic tank, however, did not need any repairs.

Should I back out and accept the loss of my earnest money or should I continue with the deal? The property did appraise for $34k higher than my purchase price which is what’s keeping me in the deal. What do you think?