FACTS: The buyer went through the inspection period and is set to close in two weeks.  The property has a septic tank on it, which the seller disclosed.  The seller now orders the septic tank inspection.  The septic tank company notifies all parties that there are two septic tanks on the property.  The seller did not know about the unused abandoned tank but updated the SPDS upon learning of the abandoned tank.

The buyer does not want to close unless the seller agrees to have the abandoned tank removed.

ISSUE: Can the buyer cancel if buyer discovers there is a septic tank that was not disclosed?

ANSWER: Yes.

DISCUSSION:         

A seller has a duty to disclose facts materially affecting the value of the property that are not readily observable and are not known to the buyer. See Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115 (App. 1986). Although the buyer could have confirmed there was a second septic tank during the inspection period, the seller still has liability for failing to disclose the second septic tank. See Barnes v. Lopez, 25 Ariz. App 477, 544 P.2d 694 (App. 1976) (Seller still liable for zoning misrepresentation even though buyer could have confirmed correct zoning.)

Therefore, the buyer may cancel under section 4f, which provides the buyer a five day opportunity to “disapprove” of the updated SPDS and cancel. Note: There is a correct process to “abandon” a septic tank if it is no longer used.  Each County in Arizona has a form available online regarding how to abandon a septic tank properly.