Q: In the state of Maryland, Can you purchase a home and occupy that home knowing there is a failed septic?

A: You are confusing two concepts. You might be physically able to occupy the premises, but perhaps not without governmental response. Without septic the property will not have a Use & Occupancy Certificate. The property will not pass any septic inspection called for in the real estate contract, either. The owner is willing to finance in order to avoid you applying to a legit lender whose underwriting standards would not allow a loan against a property with failed septic.

Do yourself a big favor, find another property or request that the seller fix the septic, show positive test results and a County/City issued Use & Occupancy Certificate. Why buy, move-in and then fight a possible condemnation or receivership action? If that happens, will the seller abate your obligations under the financing documents? No, they won't. They'll foreclose you out of the property.

A: Yes, a buyer can legally purchase a home in great condition, terrible condition or anything in between. People can purchase property without a home on it at all, or with a home they intend to bulldoze.

Now most of the time a bank will not lend money to a borrower to buy a home if it is not in livable condition. There are some exceptions, for example, when buyers get a renovation loan and the lender knows money is going to make repairs. If the conditions are bad enough the local government may condemn a property and/or impose fines and/or order repairs.

In Maryland, a property owner may not rent out a home to tenants if it is not livable, but beyond that the ancient "buyer beware" principle generally applies. While not legal advice I hope this information helps.