Hiding Behind The As-Is Veil?

Hiding Behind The As-Is Veil?

To Disclose or Not Disclose, That IS The Question

My clients fell in love with a bank-owned property - what's not to love?  A unique home sited on the Shenandoah River with gorgeous views.  The bank addendums provided my buyers with an inspection period and we proceeded with our inspections, then everything started to sprial downward.

The home inspector brought up some issues and questioned if a final inspection had been completed.  The septic inspection determined the system is not functioning properly - the prior owner had a bon fire next to the above ground tanks for the system and melted them. 

After the home inspector's comments we wanted to verify all inspections were completed on the property - after  visiting the local health department we learned that the system had been inspected and did pass.  Of course, once they learned of the damage that has occurred, they quickly provided us with a repair permit.  Then we visited the local building department - interesting, all inspections were done up until the finals -- they failed, and instead of making any corrections and having a re-inspection the prior owner simply moved in and neglected to ever get final inspections, much less an occupancy permit.  (Kind of scary that no one checks on this kind of stuff...isn't it?) 

Obviously, after learning that there were such issues to deal with, buyers could not obtain financing prior to them being corrected.  Think the seller (bank) would make any effort to correct any of them?  Nope.  All they wanted was a decision from my clients as to whether or not they would proceed with the transaction, As-Is, Where-Is.  All I wanted to know was how the heck did the seller (bank) ever let the prior owner ever roll their construction loan in to permanent financing without an occupancy permit...I've always had to provide one of those on a new construction. 

In accordance with Virginia law, agents must disclose all known material facts related to the property or concerning the transaction of which the agent has actual knowledge.  Unless there is some loop-hole in the law, I don't see how they can get around this.

We just checked the MLS today -- think there is any mention anywhere about the fact the property has a septic that isn't functioning properly or there is no occupancy permit?  Nope, not even a note to call the agent prior to writing an offer.