1999 Dodge Durango Brakes

We have been wondering if it is some sort of vandalism or if it was done intentionally at the place we bought the vehicle. Of course it was sold as is and we don't have a lemon law in the state of Nebraska. The mechanic said to get ahold of my auto insurance company and see if the repairs are covered by insurance. I bought the Durango in February and it has been sitting since the first of May when the brakes went out. Just finally had enough money saved up to do the repair.
Was told that all the seals in the brake system will have to be replaced as well as the wheel cylinders and brake calipers, then flush the whole system. I can't afford these kind of repairs. It saddens me to say, I want my vehicle back on the road but can't afford it now.
So if the brake fluid was never changed or whatever, does it break down and turn to oil? We were told that it was motor oil but I wouldn't know how to tell for sure.