Real Estate Advice Needed Pa.

Speaking with a lawyer also but also wanted to branch out here for any ideas.

So my wife and I have been looking for homes for over a year. Found the perfect one. Estate sale, as is. Got it currently under contract for 25k under asking. Seller had inspections done by reputable inspector that I spoke with and said there were no limitations so we were comfortable with using that. Sellers said the septic was in working order but "expect replacement in the future just because of its age". They stated they did not have it inspected. The sellers disclosure (done by the lady's daughter who did not live in the house but is the executor) checked the box "no" for any know issues with the septic etc. We took an educated gamble and figured we'll start saving for a new septic eventually and just use this for now since it's "in working order". They did not get it inspected and we waived ours.

House went under contract. I decided to call the home inspector to talk about a pre-closing walk through etc. We were talking about the house and he said it looked good aside from the septic failing. I said no we were told it never got inspected. He said no it did and gave me the number of who inspected it.

I called this guy who told me he was out there (days before the sellers disclosure was completed) for an inspection and some sort of test and said when he put his camera in there (cesspool) it was an automatic fail. He let them know and they cancelled the actual test/rest of the inspection. He sent me the pics he took and the date he was out there. He told me the septic would need to be replaced completely prior to moving in.

I called my realtor pretty upset. She called the listing agent who admitted that he knew about it and was the one who brought the inspector out there, paid him and cancelled the rest of the testing?

So I proposed that the seller buy the permit and perc testing to figure out what system it needed and if the quote was 20k or less, then I would cover it and could do so after closing (like I said I was expecting to anyway, just not this soon and we got 25k off asking). They countered and said they'll do the testing but want to raise my responsibility to 30k.

This is where we are currently.

We have 15k earnest money already submitted. Where should we go from here?

Also am I required to make my lender aware of this?

Thanks for any help or advice.