I don't know what is on the walls or how many coats are on it. I would assume it is a waterproofing paint since they had a water problem. They had an interior french drain system put in. Yes, in certain places it is flaking off.
I don't really know that they previous owner "butchered" this. But his track record is not good. I get the feeling he may have just put the paint on, over dirt, spiders webs, etc. I was hoping to just do it overagain. I at least need to do some of the hard to reach places he skipped and behind the oil tank (which I just removed).
I guess I have to just clean it up and apply over it (with my fingers crossed).