Our sale went to SHIT (literally)

The septic system failed inspection. Needs have new tank installed! So our flippers will most likely back out. So we will just default on the loan (deed of trust) and let it go to foreclosure.

Oh course, IPX did not it inspected as the law requires when he sold to us. We were not aware of the fact the property was on septic since we did not get SPDS on it either. The law requires inspection and transfer of the ADEQ permit .....HOW DOES HE GET AWAY WITH THIS?