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I think that it is all in what was honestly disclosed - if your BIL disclosed what he knew, I'd say it was a risk on the part of the buyer that the buyer knew going into the deal.
The buyer rolled the dice and it turned out to be a bit more serious than he thought - if there were no issue/a minor issue - would the buyer be coming back to offer your BIL more money?
I went through something like this a few years back with my wife's Kia- water pump was going bad, I knew the water pump was going bad and priced the car accordingly as well as mentioning it directly in the ad and disclosing it to anyone who came to see the car.
Someone buys it - I tell them take it directly to your mechanic and get it fixed. What do they do? Drive it for a month, seize the pump and blow the engine. They came back to me wanting their money back. I felt bad for them, but the issue was fully disclosed and the error was on them.
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1972 Porsche 914
2009 Mazda3
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