Many lakefront homes, especially in rural areas, use a septic sewage treatment system. I'll be the first to admit that there's nothing overly appealing about sewage treatment. Most folks will agree that as long as "it" gets taken care of, they don't care to know the details of where "it" goes, or how "it" gets treated.

Septic systems can be inspected and certified by licensed septic contractors prior to purchasing a home. The process involves

1. Opening up the tank
2. Pumping it out
3. Doing several tests that allow the septic contractor to gauge the functionality and health of the system.

This process typically costs between $300 and $400, and is money well spent in my opinion.

Most jurisdictions have really tightened up on rules that are designed to keep harmful drain field effluents from leaching into surrounding lakes, ponds and rivers. This really becomes an issue of geometry and soil characteristics. In a nutshell - the relevant jurisdiction (city or county level) will have rules that specify the proper set backs that are required so that harmful effluents are not able to reach surrounding bodies of water.

A word of caution - many older lakefront homes may have drain fields that no longer comply with newer setback requirements. It is a good investment of your time and money to confirm the location of the existing drain field, and to know whether or not the local jurisdiction will require you to relocate the drain field should you have to replace it down the road. A drain field that is any closer than 50 feet to the lake will be a candidate for relocation in most jurisdictions.

I have provided this septic tank link which has a pretty good description of how a septic tank and drain field work, and in my opinion does a nice job of educating folks on the concepts and proper maintenance of septic systems.

The truth of the matter is that a septic system, when properly designed and maintained, is an elegantly simple, ecologically friendly way of treating waste. Most buyers, when educated on how a septic system works, are no longer fearful of them.