Lease option cant purchase due to home damage

I entered into a lease-option agreement giving a down payment of 3x the rent in August 2007. The home did not pass inspection until mid February 2008 due to the owner not making necessary repairs, and technically was un-inhabitable. All the while I made on time monthly payments. In March, I noticed a large crack in the basement wall that was painted and covered with plaster to conceal and water leaked into the basement with each rain. I immediately notified the owner in writing and he promised to have a professional waterproofing company come to make repairs, yet he never called back. After a week of heavy rains in May, the entire basement flooded. I notified the owner again(in writing) he sent a carpenter out to the home to install a sump pump. The carpenter dug a hole in the basement 3x times the size needeed to install the sump pump, left and never came back to finish the repairs. For almost a month now, the hole has been in the basement and the owner has made no attempt to properly make the repairs. He only wants to install a sump pump, but not the piping around the basement to lead the water to the sump pump. Therefore, even if it was installed, it would be useless. I have had inspections done on the home and the work is priced at a minimum of $4200. Also, the foundation of the home is sinking into the ground on one side, and even with the sump pump, the problem may not be corrected. Long story short, I do not want to purchase this home and I have 5 weeks left on my lease. Per our agreement, all repairs over $1,000 had to be fixed by the owner. Do I have the right to re-coup my deposit as well as the 20% rent credits for each month? Also, do I have to pay the final month's rent as due to the large hole (2x4 deep) in the basement, I cannot use the basement nor allow my children downstairs?

[OHlandlord]

A hole in the basement does not make the property uninhabitable. (Is this a finished basement?) You do have to pay the final rent payment. If you wish to negotiate a rent credit or reduction for the decreased space available to use, you can do so.

As part of your offer to buy the house, did you include a home inspection clause? If so, I would think that the home does not now pass this inspection. Call the inspector back and have him look at these new issues. If the inspection clause is part of the offer and the house will not pass inspection, the sale should be cancelled.

The foundation should be checked by structural engineer, and not just a contractor or an inspector. The problem could be normal settling of the house, or may be a structural problem (in which case it surely would not pass inspection until repaired). A carpenter is not qualified to diagnose and make repairs to water penatration of a basement. Make these phone calls. If the house sale is cancelled because the house is not structurally sound or the owner will not repair, you should be able to recoup the down payment. The rent credits may or may not be recoverable, depending on how the lease/RTO agreement is written and the market rent level for your house. Start calling these people tomorrow!