In California, the courts have held that a failure to disclose physical defects in real property, such as a construction defect or soil erosion, can be the grounds for a lawsuit against the sellers and/or real-estate agents who fail to disclose such defects. Furthermore legal defects, such as if the property violates zoning ordinances or was not built to code, could form a cause of action if they are not disclosed.
To establish such a case against the sellers/agents, however, the alleged undisclosed facts must have been ones which were not easily accessible by the buyer/agents, usually because the sellers/agents are concealing them. Anything which is public knowledge would be something which is easily accessible to both sides.
Having said that, there is precedence to support a claim for the nondisclosure of defects in a property which are neither physical or legal and which would otherwise be public knowledge. The courts held, for example, that in the case of a property where a multiple murder had occurred some ten years prior to buying it, the purchaser had a cause of action against the seller for concealing this fact. Even though the murder was something which could have easily been discovered prior to the purchase of the home, it was not incumbent on the buyer to discover this fact because “murder is not such a common occurrence that purchasers should be charged with anticipating and discovering it.”
Since many potential buyers were hesitant to purchase a property with such a sordid history, it could be shown that the value of the house had diminished. Thus, non-disclosed facts need not necessarily be physical/legal or hidden in order for a cause of action for failure to disclose to exist.
Sources:
145 Cal.App.3d 261, 193 Cal.Rptr. 130
Cal.App. 3 Dist.,1983.
5 Witkin, Summary 10th (2005) Torts, § 797, p. 1152
Chapter IX. Torts