Am I Supposed to Disclose That?

I did a double-take when we passed by. I was innocently enjoying a gorgeous drive through Whine Country when I saw a "Bank Owned" add-on stuck to the Realtor's "for sale" sign. It was a very well-maintained two-acre (or so) estate. Don't get me wrong. I would bet that many of the estates for sale in this area are REO, but they just don't advertise it. I have a very hard time determining which ones are which. But this one said it right on the sign.

When I got home, I rushed to my computer to find it. Here, you can see for yourself:

39030 BELLA VISTA, TEMECULA, 92592, CA
Price $1,200,000 Year Built: 1990
House size: 3,772 sq. feet
Lot size: 101,059 sq. feet
Status: Active
Bedrooms: 4
Bathrooms: 4.00

BANK-OWNED & NEWLY REFURBISHED CUSTOM HM, ALL NEW GOURMET KITCHEN W/LRG NOOK, NEW LIGHTING/TILE/WOOD FLOORING, NEW CARPET IN 2 RMS, ALL NEW INTERIOR PAINT, 2 NEW A/C UNITS & HEATING SYS, XTRA-LRG WATER HEATER, SEPARATE WORK AREA & STORAGE IN GARAGE, UPSTAIRS LOFT, DOWNSTAIRS BDRM W/PRIVATE ENTRANCE, PRIVATE PATIOS OFF MASTER & FAM RM, SEPARATE CHILDRENS WING W/2 BDRMS & 2 BATHS, BEAUTIFUL LANDSCAPING W/PALMS & ROSES, SEE AGENT REMARKS.

The description states that it's "newly refurbished," and, for a house built in 1990, it sure looks that way from the pictures. But, why would someone put all that money into their house and then walk away? I bet you're thinking what I'm thinking. Refi. Pull out some equity. "Honey, let's put in that freestanding tub we've always wanted." Etc. Interest rate adjusts up. Values drop. Oooops. We dumped all that money into the dang house and now we can't afford the payments or sell it!

I don't know what happened, but I do know we felt that way when we rehabbed and floated the apartments and then had to give them away for next to nothing. Thank God we didn't go into foreclosure!

There's one thing that isn't mentioned in the truncated description above. I happen to know that a private high school is in the planning stages of being built directly across the street from that house. Do you think the agent has disclosed this? I don't know. But, what are agents and sellers legally obligated (we won't talk morally here) to tell you about when they're trying to unload their albatross?

Do they have to tell you if they've shot a rattlesnake to death on the property?
If their child uses the bushes for a toilet?
The neighbor threatened to kill them if they didn't move?
If a stunt flyer practices overhead every night?
The grass keeps dying on the right side of the yard only?
There are mice in the walls?
There's a pungent odor in the laundry room that we they can't get rid of?

Some say that living close to a private high school increases your property value. I question that. Then again, not a whole lot can increase your property value today in Southern California.