That depends on the bank and the deal negotiated between the parties. We just installed a brand new septic for a buyer on one bank-owned property, and the bank paid. On another REO property, septic system failed, and buyer replaced the system as a post-closing matter. AZ requires a septic system be certified, pumped and transferred. It does not require the septic system to be fully operational. However, the buyer's lender will!

Depends on the needs of the bank the buyers are using to purchase. Typically, Fannie REOS need the home to qualify for an FHA loan.  The septic has to work in these situations. Once we had a FANNIE REO in which we discovered that the effluent from the home - sold several times over many decades before the foreclosure - was draining into a hole under the driveway. Once discovered, FANNIE had clean up the lot to EPA standards and installed a brand new sand filter - total cost over $60,000 with a home that was worth no more than $150,000 at the time.

I've never dealt with a foreclosure that had a septic - we have very few areas with septic in the Charlotte region.

What Candice A. Donofrio said.

I don't think it's the bank it's the municpality. In essence, your sewer sytem is not working is it? In IL we need the county to sign off that it works.

If those repairs are brought to the lenders attention by the appraiser.

"As Is" takes on an extreme meaning with foreclosures, plan for the worst and be pleasantly surprised at anything that works well after closing.

It all depends on how many sacrifices you made by using the bank's paperwork...

I have listed and sold hundreds of foreclosures in the past 26 years and never had one that needed a septic repair.  

Foreclosures are sold 'As Is' in most cases.

The usually only do repairs on those items that are an immediate danger or hazard to the showinglike holes in floors, broken glass, handrails missing, etc.

   They almost always sell "As Is"

Candice A. Donofrio answered you as did Lynnea Miller 

Many good responses.

Don't count on it.

Depends on the bank ... 

Depends on the bank.

In most cases NO. Except if it is a Fannie or Freddie home, they tend to spend money to make repairs. But not all repairs, just some. The ones I have listed they did require a septci inspection. Now.. with most other banks, the homes are listed and sold AS IS. I have many cash buyers who inspect it on their own prior to making an offer. Nearly all sales are AS IS with no contingencies so buyer must use caution. 

Many times the bank will put that responsibility on the on purchaser

As with many things, the answer is "depends" (no pun intended!)

Candice A. Donofrio nailed this one!

Banks want out of foreclosures without any expense.  Buyer beware!

in my market we sell them "as is"

NO

You have many great answers here.

I looked at the questions asked before and this one has a lot of great answers.

Have not run across this issue working primarily in the City.

Most, if not all, foreclosures are as-is.

Most times the buyer agrees to the eptic as is and deals with the governing authority in upgrading

Most foreclosures are "As-Is" and the banks do not require any repairs.  If the county the property is located in requires a septic certification then the buyer my need to establish an escrow account to cover repair/replacement costs.

Depends 

I've never dealt with a foreclosure.... but I'd guess that it's the bank that calls the shots!!!!

As is. It is the buyer problem even homes are redtagged.

Not from the buyers' perspective; we've seen some major rehabs.

Seems like a regional issue. I can imagine a community that has lots of homes with septic tanks might have rules regarding the condition of a septic system upon transfer of ownership. Very few properties with septic tanks in my market.

Not an issue where I am located!

The banks tend to come from the land of AS-IS but all is negotiable

Not in my neck of the woods.

That depends...

many are as is