After selling a home built on a hillside with underground springs, the owner fails to disclose this issue. The new buyer discovers a problem later. Who can be sued?

In real estate transactions, both the seller and the agent have specific duties to disclose material facts regarding the property being sold. A material fact is any crucial information that could influence a buyer's decision to purchase. In this case, the existence of underground springs is an important characteristic that affects the property's condition and potentially its value.

The seller is obligated to disclose any known defects or issues that could negatively impact the property’s value or the buyer's enjoyment of it. Failing to disclose such significant issues can result in legal liability for the seller, as they have misrepresented the property.

Similarly, the agent also has a duty of care and must act in the best interest of their client, which includes ensuring that all essential facts are conveyed to potential buyers. If the agent was aware of the underground springs and failed to inform the buyer, they too can be held accountable.

Thus, both the seller and the agent can be sued if it is determined that they were aware of the issue and failed to disclose it appropriately, making the answer correct in acknowledging that both parties can bear responsibility in such situations.