Michael wrote:

First of all, it was never disclosed. The seller casually mentioned
it DURING THE CLOSING! It was not on the official disclosure form.

Is it required where you live to disclose musty basements?

If it were, I would not have brushed off the scent of must in the
basement (which I figured is common when a dehumidifier is not used in
a basement).

It is. The basement in our house smells musty if we don't run a
dehumidifer in the summer and we have no water problems at all.

Also, I called my realtor and she says that it is not required to
disclose this if it was cured.

Well, there you go.

And the dehumidifier is starting to help now. Its been running
non-stop for 5 days and the must smell is starting to go away. I
think I may need to replace the carpet though as it is holding some of
the scent.

Just wash it thoroughly with one of those "steam" cleaners once you get
the humidity down. And here's something you should do: get a
hygrometer. Find out what the humidity level really is.

I am going to the library today to find out if disclosure of mold,
whether or not cured, is required in my state. If it is, I may seek
legal action due to the seller not disclosing this.

All you have right now is a musty smell. Even if mold disclosure is
required exactly what are you going to sue them for and what recourse
are you expecting?