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What to do if seller hid damage and lied on disclosure

We bought a house 6 months ago and are now having major cracks appearing in the walls/ceiling/tile and we found a spot were the walls are separating. The seller had all the flooring replaced and the walls all painting/patched up. We had an inspector who did not catch any of the foundation issues or structural damage. Someone recently told us that when the seller was remolding, they had to halt the construction because the foundation cracks were so bad. On the seller's diclosure they had put they did not know of any foundation issues or structural damage, including cracks on the walls/ceiling. We talked to a lawyer who said we could sue the seller but the chances of recovering the money after we won was slim so it would not be worth it to spend all the money trying to sue them. The lawyer also said we could only recover the cost of our inspection if we went after the inspector. Is there any other options we have besides walking away from the house?
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March 11 - US
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Answers (2)

Thomas, Too bad to hear about your situation. Of course, since I am no lawyer, I cannot give you legal advise, but as a buyer's agent, completed many transactions, I have had a few life lessons. I will share some of my experience.1) If you had a buyer's agent represent you and they are a licensed realtor, that realtor can get free legal advice through the hotline provided to us.2) Usually, a home inspector has a disclosure on their report that will exclude them from a lot of structural findings because they are not a structural engineer. A good home inspector will point out the bad things, even if it kills the deal 3) beware of many flippers, which it sounds like, your "remolding" comment, this may be the case. Some in the area that I work are just horrendous and their craftsmanship is the worst. They do things in the cheapest manner to get the job done 4). Beware of disclosures in the supplements section that says the owner has never lived in the home and is excluded from the transfer disclosure statement 5) My last comment would be just exactly who is the "someone" that told you the seller knew of the problem and covered it up? In the days of the don't ask, don't tell, try and hang out with people who believe in, if you see something, say something and search out an agent in your area on Zillow that you can trust and refer others to.
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March 11
Amazingly you got good advice from the lawyer, he's a keeper.  The best option beyond walking away is to fix it up,  when you sell disclose the problems you had and how you mediated them.  Keep your documentation for all repairs. 

Good Luck
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