Noah, as diplomatically as possible I wold let the seller know that he is opening himself up for potential lawsuits later on if he doesn't disclose this fact.  If his neighbors know about this, they will surely tell the new owners and they could and will come after him financially.

I let my clients know taht they need to disclose this issue because I have to because I know about the issue.  that usually solves it.

I'd mention to the seller they might have accidentally forgotten to disclose the leak and the repair.  

I always advise my seller clients "If in doubt, disclose."   Things that sellers think may be horrifying to buyers are often seen as no big deal to most buyers.  Even if a disclosure causes a buyer to walk, another buyer won't be bothered by the same issue.

Gabe Sanders makes awesome points about the risk of lawsuits and neighbor's potential knowledge of material facts.

Noah Seidenberg - Have the talk with the sellers after the listing agreement is signed.

I think Nina Hollander 's response is best. It's the same up here. If something was repaired then let them know. No use hiding this fact. It is what it is.

Noah -- in North and South Carolina if a defect was repaired and there are no ongoing issues, it does not have to be disclosed. You only disclose what has not been repaired. However, if it was something serious enough, I'd still encourage my seller to disclose along with repair information.

Noah,

I would disclose and encourage the sellers to give you the paperwork and proof that the work was done.  I would let them know that you know about this.  Maybe, it is my California sensitivity knowing the litigious nature of our state and its constituents, we always disclosed as much as possible, and if repairs were made asked for the paperwork.  It avoids a lot of headaches later on.  A

explain the liability of not disclosing.

Hi Noah -- in California one of our many disclosures is the Seller Property Questionnaire which asks a seller about repairs that have previously been made. If I notice a discrepancy in what I know(or have been told) on any disclosure, I point it out.  We also have a disclosure where the listing/selling agents write their observations and what they know about the property.   

As Alexandra Ron & Alexandra Seigel commented we live in a highly litigious state so when in doubt disclose disclose disclose upfront --- it may be a reason that a buyer does not purchase but it save time, money and aggravation in the long run.

As an owner of a home inspection company...what happens when the inspector puts a note in the inspection report that there was this issue - but that it appears it has been repaired correctly?  (We have had buyers tell us straight up that they now suspect that the seller is trying to hide things from us.)

Noah Seidenberg sorry you lost the listing. Here we have to disclose. It is not fun to lose, think of all the other things you could have lost if you would have moved forward, sleep, reputation, and piece of mind. If the seller planned on being dishonest about this, who knows what else later on. 

Calll the listing agent...many "assume" repaired means no need to disclose.

Oh I handle this before they fill it out. I tell them to disclose everything they know about the history of the property and how it was corrected. I use specifics and in this case I would directly mention the foundation leak. I also tell them that most buyers are not overly concerned when they see it disclosed and know that it was repaired. There is a comfort level in the honesty of it.

In Illinois, if the defect has been repaired and is no longer a problem, there is no requirement to disclose.  IF the leak has lived through a few good strong rains, then it's no longer a problem, and no longer needs to be disclosed.

Nothing wrong with disclosing the "repair" if that's what the seller wants to do, but if they don't want to, they don't have to, and you, as their agent, are not representing a lie by going along.

In fact, in Illinois, we agents are not really supposed to "advise" our clients on what to answer on the Illinois Property Disclosure form.  If they have questions about their answers, we are supposed to refer them to their real estate attorney.

Like you, I tend to try to err on the side of "overdisclosure"... but I'm not going to insist that a seller disclose a defect that's been repaired.

I would speak with my seller to make sure they properly fill out the form. 

I alwasy advice  sellers to be honest when filling out the seller's disclosure.

If they don't disclose, you must. Tell them about their liability. That usually solves the problem. If it doesn't, have them sign stating they aware aware of their liability. Your attorney can draw it up for you. 

Disclose is always the best way to keep out of trouble.  We have a box that can be checked no representation if they do not want to disclose.  I think that is why the home inspection is so important to bring to light things that are not seen.

Noah Seidenberg it better be disclosed or get ready for a law suit.....of course, that need to be told nicely... 

You remind them that by saying no to this kind of repair it opens up liability issues against them.  Suddenly they are anxious to correct the "error".

You really have some great answers here, Noah.  And, I understand that here in Minnesota, any agent or broker is required to disclose if asked.  So the owner might as well fess up.

I would bring it to the attention of the listing agent, so they could have the seller correct the disclosure.  If the buyer wants to make an offer, it would be listed as a condition to have the leaks repaired.  Of course you always insist on an inspection.