Agree that you may have a situation of washing out of the sand from the canal water or rising/lowering of the water levels from season to season.  And, if may be very very difficult to see evidence "outside" of what is happening internally.  Sand is a good material to build on but may wash out if proper filters are not used or if they "break".

One thing that comes to mind is water table fluctuations.  When the water table drops the soil will settle because the specaes between the gravel or sand are now empty of water and they squeeze in on each other causing a settlement.

Being so close to the canal, the water table has definetly jumped up and down a few times.

What might have caused a low water table?  Construction work up stream that may have reduce the flow to an abnormlly low level.  Belive it or not, even trees will have a sgnificant effect on local water table but probably not in the case.  Increased water table is not a concern for you in the case, unless the water came gushing out of the crack, i.e., lifted the slab.  There would be signs of stainging or rust on some mechanical in the basment due to high humidity.

Good news is that if the problem is related to low ground water table, the settlement is over - for now.  The slab wont drop anymore unless the water table drops further again.

The slab won't bounce back either because the voids squeezed in on each other and won't allow the water back in to allow the soil/slab to rise.

More serious is the concern with the bulding foundation.  have good look to see if any repair work has been done which may be a sign of more serious trouble.  If the basement is finsihed it will be ahrd to tell from outside.

If you don't want to marry this house then I suggest spending a couple hundred bucks on a geotechnical engineer to get some peace of mind and transfr liability.  That's my recommendation - get an engineer.  You're client would appreciate that.  Don't let it become your problem.

Thanks for the advise. I have been doing structural inspections for 15 yrs. This is the second structure in 15 yrs that I actually walked away from. I was not comfortable with it and could not figure it out. Two yrs ago repairs to this $700,000.00 home were made and now roof leaks are everywhere and as I mentioned before active foundation cracks. I know the  buyer hired another structural engineer (expert witness) and I haven't heard anymore about it.

This is very interesting about the water table. I have read information about it before. I will definitely keep it in mind for the next similar project.

I once learned that under cyclic loading conditions, sand is the absolute worst building material.  Sand while mostly incompressible, will flow even in the absence of water.  The cylclic loads push the unconfined sand out from under the load a little at a time, until there is no more support.  You did not mention if the "rear of the structure" is a garage or just living space.

The rear of the structure is living space. The garage is at the front of the residence. There is also a swimming pool at the rear between the edge of the structure and the bulkhead. I suspected maybe a pool leak. But according to the pool specialist there are no leaks.

You have not characterized the cracks so it is not practicable to blame the result on sand until we know more.  Are the cracks faulted?  If so, how much?  How wide are the cracks?  What is their pattern?  What is their orientation?  When did they first appear?  Are the cracks getting wider?

These questions should be answered before looking at the sand as the culprit.  It could be just poor quality control in the treatment and placement of the concrete!