Disclosure Question in CA (agent, insurance, attorney, inspection)

[averywj]

My wife and I just bought a house a week ago. We had a home inspection done prior to purchase and in the report there was water damage noted under one of the bathrooms which was attributed possibly to a leaky toilet. The seller had had the bathroom remodeled fairly recently but she had laid some really ugly tiles down so I decided to rip out the tiles in addition to fixing the toilet. As I removed the toilet and the tiles it did not look like the toilet was leaking. But there was definitely water damage in the floor sheathing towards the wall and in the sill. Since I had already torn up the floor I figured, I would go ahead and remove the drywall too. To my surprise it turns out that the entire wall from about 4 feet and down was rotted including the exterior sheathing, except for the new framing where to my best guess the previous owner replaced a leaking window (everything above the leak line is still solid and intact). In our case the seller acted as her own agent (she is an agent by trade). I feel that since she knew about the leak and had the window replaced but did not fix the rotten siding or sub floor only shored up the rotten studs that she should have disclosed that fact to us prior to buying the house. Is this something that I should pursue or was the fact that our inspection turned up some rot enough to get her off the hook? On a side note we were going to walk away from purchasing the house because of the amount of rot found, but she sent us a letter saying that the walls were in fine shape and there was no structural damage.

[Spraynard Kruger]

If she obtained a permit for the work, or filed a claim with her insurance company, you could prove that the owner witheld a material fact and not a latent defect.

You should discuss this matter with a real estate attorney. You probably have a strong case considering the water damage was reported.