“All material facts must be disclosed to potential buyers.”

That’s precisely the OP’s question: Is this fact material or not? The answer is not obvious to me.

I bought a new house from Centex in Orange County in 2001. A couple of years later we got letters from attorneys inviting us to sue Centex. The builder sent counter-letters arguing that litigation could be lenghty and that resale values may be depressed until a settlement is reached. Did I mention that the houses had no problems (defects) whatsover?

I returned the lawyer’s postage-paid envelope with some obscenities inside. Ambulance chasers like them make it harder to invest and create jobs.