....
The owner says that he already has
someone who is willing to pay more than I am paying and
that the new
prospective buyer has looked at this and does not think
that this is a
problem.

Then walk, don't run, away from this "deal". That's a hard
sell tactic and an attempt to negate the inspector. Other
than that, without knowing what has or hasn't washed
away/out that's not visible, and lack of mention of future
requirements or length of time and likelihood of the success
of such a fix, I think it's better to let the higher
offering party (there isn't one or it wouldn't have been
stated that way) have their joy. As for running the water
to the street? Be ABSOLUTELY POSITIVE that the
ordnances/codes would allow that, and would allow it to be
permanent. In CT, certain parts, it ain't allowed! There's
not enough street drainage to pick up directed runoffs, they
claim.

Not to mention the ineptitude of woever did the layout/work
for thisproblem to occur. What else did they screw up that
won't be visible right away? I'd take a pass, even if it
was going to be my only chance for many years to get a
house. I've seen places like that - there are lots of them.
Code? What code? Zoning ordnance? What's that?

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