We live in the greater Boston area and recently made an offer on a
house which was accepted. The house is a one-story ranch with a
basement and is 48 years old. Today we had a home-inspection where
vertical cracks running on both the front and rear foundation were
discovered at approximately the same offset from the edge of the
house. We first saw the house during an open-house and asked the
seller's agent many times if there were any disclosures on the house
to which she replied that it was an estate sale (the woman who was
living in the property had passed away last year and nobody was living
in the property at the present time) and so there is no disclosure.
The seller's agent disclosed today that she had a letter from a
structural engineer hired by the sellers, commenting on the problem.
Some excerpts from the letter follow:

"Based on the topography of the lot it is likely that the west end of
the foundation was constructed on fill. The cracks are the result of
some settlment within that fill. The crack at the front is
approximately 1/8" wide and the east portion of the front foundation
has moved south about 1/4" out of plane with respect to the west
portion. The crack at the rear of the foundation is about 11 feet
from the corner of the house and it is also about 1/8" wide" [I didn't
measure the crack but it sure appears more than 1/8"; I could stick my
pinky in]

"Based on visual inspection of the color of the mortar inside the
cracks and the lack of sharp corners, and the existence of old
caulking inside the rear wall of the foundation, I conclude that the
cracks have existed in the foundation for many years".

"Any repairs made to the foundation cracks can be considered to be
cosmetic"

Our home inspector has cleverly let himself off the hook by noting the
crack in the inspection and referencing the structural engineer's
opinion in his report.

Here are my questions:

1) How serious is the problem? What is the guarantee that the crack is
not going to propagate? It seems to me that with freeze thaw cycles
and natural expansion and contraction this could open the crack up and
make it a horrible situation.
2) Was it legal for the seller's agent to not show us this letter
before the offer was made despite our question about disclosures? At
the very least it seems unethical to me.
3) Do I have the right to back out of the deal now? (I am talking to
my attorney tomorrow anyway).
4) If I decide not to go through with the purchase and sale can I
recover the cost of the inspection ($300 + $195 for a lead inspection)
from the seller's agent for not having shown us this letter when we
asked for disclosures? We would not have made an offer had the
disclosure been made to us previously.
5) Our agent (buyer's agent) claims that nothing illegal has been
done.

I somehow get the feeling that there is no one representing our
interests other than our attorney and that the Massachsetts
real-estate dislosure laws are a joke.

Frustrated and angry :-
-Prospectivehomebuyer