The short answer is yes, yes and yes! The best thing to do is be honest in this situation. Be up front with your agent and make sure that your agent is disclosing the problem to potential buyers. You can get sued after you have sold your house if the buyer runs into problems and finds out that you knew about the issue, and didn’t disclose it to them. This could potentially cost you thousands in lawyer fees, not to mention the headache of going through a conflict like this.