Well, you have a big problem. Cutting in a new tap to the city.....first they will nick you pretty hard for permits, and that may involve digging in the street...never cheap!
I would contact the famous law firm of Dewey, Cheatham, and Howe or another good real estate law firm. If you could prove the previous owner, and/or his real estate agent, had knowledge of this drain problem, you may have recourse. It would seem likely they would have been aware all these years that the toilets didn't work well! And did you have a home inspection? Did that raise any questions?