A seller is aware that the basement floods during heavy rain. Do they have to disclose this to the buyer?

Material defects known to the seller must be disclosed to buyers under most state laws. A basement that floods is a material defect because it affects the property's value, habitability, and safe use. Most states require a written property disclosure form listing known defects (water damage, foundation issues, roof problems, septic issues, prior repairs, environmental hazards). Concealing a known defect can expose the seller and even the listing agent (who has a duty to make sure the disclosure is complete) to lawsuits and license discipline. 'Caveat emptor' (buyer beware) is significantly weakened in modern real estate law for residential transactions; sellers cannot hide problems they know about. Honest disclosure also protects the seller — once disclosed in writing, the buyer cannot later sue for a defect they were told about.