This is also where I ask them to agree to a certain amount of time to allow a return should product fail.   

Not wanting to bear the burden myself, we had a conversation with the seller (who did not want to replace the system), and ended up getting it inspected by a 3rd party inspector to which it failed. 

After a failed attempt of selling in 2015, I spent two years upgrading the property to a point to make it desirable.

I've only been concentrating on all the ways I would fail.

The reason the first transaction is falling apart is surely the failed Phase 1. 

So, I failed to find a replacement property and couple of days ago my CPA shares the news with me that because of the 800k mortgage debt I had on the property I am subject to pay capital gains taxes on the debt?

In this case, the fact that the bank was ready with their very specific title language as soon as the contract was delivered shows some evidence of knowledge they failed to disclose.  

In TX the property owner does NOT return my $100.00 "earnest money" off after an offer fails; they are NOT required to refund it! 

It's almost comical when they have, "Short sale expert" or "Certified short sale specialist" on their signature line in their email and you find out that the extent of their short sale education/experiences was the four hour CRE webinar they had at their home office.And for those that actually had experiences in short sales, they failed to update their experiences.

IF YOUR CONTRACTOR OR A SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS, SUB-SUBCONTRACTORS, OR MATERIAL SUPPLIERS, THOSE PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR PROPERTY FOR PAYMENT, EVEN IF YOU HAVE ALREADY PAID YOUR CONTRACTOR IN FULL.