See if your client was provided a copy of the appraisal. Check to see if it reflect private sewage on page 1 of the report. Also, was a home inspection conducted? If so, that is something that should have been checked. Call the local municipality's public service department to find out what their records indicate as sewage for the property.
Gather all the information you can and have the client seek legal guidance. At some point, someone goofed and if expenses came about due to the client not knowing there was a septic. An attorney would be able to provide guidance on who is the responsible party and hopefully that party's E&O insurance will step in to rectify the situation.
Hope this helps,
The Driscoll Mortgage Team.
(I'm on the Cape, but I can help you choose a local pro if you want help doing so.)
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Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
I have seen this happen before and it usually does not end well for all concerned. First, make sure that you are correct that the property is in fact on a septic tank and then alert your client....and your broker.
I am assuming that it has already closed escrow. If that's the case, your client should seek legal advice immediately.
Best of luck,