SFH requires $30,000 in repairs to septic and well system

[Landon Clipp]

Hey folks. Me and my business partner have a SFH with tenants currently occupying it for over a year at this point. We bought the house early last year. The house has a septic drywell and fresh water well, no city connections at all. Recently the tenants were complaining about the water not draining properly so we had a septic company come out and do an inspection. Initially they told us that the house's septic drywell (it's not a leeah field) just needed to be pumped out and it should be fine. So they pumped the septic tank and the drywell. A month later the tenants again claimed the water wasn't draining properly, so the septic company came out again and told us it appeared the septic drywell was totally clogged and not draining properly and needed to be replaced.

We hired an engineer to give us plans on replacing the septic system. He told us that the current septic system and fresh water wells are too close to each other and we would have to replace the fresh water well in addition to the septic. He said all-in-all he estimated the total cost of all replacements to be about $30k.

This is a pretty shocking number to us and we're a bit stuck on what we should do. My business partner wants to sell the house and take the loss but I know that we're going to have to disclose our discovery to the buyers or risk being sued. My thoughts are that we could just eat the $30k now and we'll get it back over the next 10 years or so in revenue and appreciation. 

What would you do in this situation and what do you recommend we should do? Would you sell the house or keep it and do all the repairs?