I am sorry to hear this; CA has very strict seller disclosure laws for real estate transactions; basically the seller must disclose all defects that the seller knew of; in fact, the real estate agent must disclose any issues that a reasonable due diligent walk through would expose.
Misrepresentation is when a party does the following: (1) a representation was made; (2) that was false; (3) that when made, the representation was known to be false or made recklessly without knowledge of its truth; (4) that it was made with the intention that the plaintiff rely on it; (5) that the plaintiff did rely on it; and (6) that the plaintiff suffered damages as a result.
Fraud in the inducement is similar, basically misrepresentation designed to entice the buyer to enter the contract. It requires: The defendant made an intentional action, statement, or omission; The misrepresentation was material to the decision to enter into a contrac; The plaintiff reasonably relied on such misrepresentation, and The plaintiff suffered some degree of injury, usually economic harm.
So statements from professionals that have worked on the home before can help prove that the seller knew of the pre-existing defect.
Here is the sample disclosure form that is required by law:
You will see it is very detailed.
As for the inspector- that is more difficult to prove- one would need to prove bribery or other conflict of interest; however, for the seller, all that needs to be proven is that the seller did in fact know of the issues and failed to disclose them- then the buyer can sue for the damages (ie cost of repair).
If the amount is less than $10,000 small claims is appropriate:
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Information provided is for educational purposes only. Consultation with a personal attorney is always recommended so your particular facts may be considered. Thank you and take care.