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Yes, you can finish a basement that leaks, as long as you address the leak first. Before finishing a basement, you’ll need to repair any cracks in the walls and waterproof the basement to prevent future leaks. It’s much harder to clean up a water leak from a finished basement than an unfinished one, so preemptively addressing any leaking areas prevents expensive repairs in the future.

It depends on what caused your basement flooding, the extent of the problem, and the risk of the flood continuing. If your flood is coming from a septic system or sewer line, breathing in the sewer gasses can be dangerous, so you should vacate. If the flood occurs from an ongoing natural disaster, relocating to a safe area might be wise. If you just have a plumbing leak or rainwater coming in, you can likely stay in the house if you don’t have electrical lines down there, but make sure you call in professionals to fix the issue immediately.

External pressure on the basement wall can cause it to bow inward. Soil, heavy with water saturation, is commonly the main culprit. The soil exerts immense pressure on the wall, causing it to fail, at least partially. This is known as hydrostatic pressure—these situations can occur after rainfall or simply due to regular groundwater presence and may be temporary or more permanent.  

Walkout basements cost more than other kinds of basements, and can also increase your risk of leaks as well as a loss of insulation, leading to higher heating and cooling costs. Improperly installed walkout basements may lead to structural issues with your foundation, so ensure you’re working with a contractor who has extensive experience with this kind of basement.