Legal Question in Real Estate Law in California

The sellers and their agent are only responsible for disclosing defects that they know of. The seller's must disclose what they know from living in the house and their agent must disclose only what a basic visual inspection of the house reveals. Your agent has no disclosure obligation, only a duty to make sure you get your disclosures from the seller's side. You say the only way the problem could have been detected would have been to do a video camera inspection of the sewer line. So unless you can establish that the sellers knew that the sewer was worn out and didn't disclose it, you have no recourse with the sellers or the brokers. Because it is wear and tear, no home owners insurance is going to cover it. I'm not sure why your home warranty is refusing to cover it, though. Is it because the failure is outside the house? I had a sewer line fail from wear and tear in a 75 year old house I owned, and the home warranty covered it, but that was in the crawlspace under the house. So basically that's all I can recommend, pressure the home warranty people to cover it (but if there's an exclusion that applies you're out of luck there), and see if you can find anything that would establish that the sellers knew there was a sewer problem at the time of sale. Otherwise, you just have to bear in mind that things in houses wear out, and if the sewer had worn out two years after you bought the house, you wouldn't be asking for someone else to be responsible. So unless the sellers knew about it, it is just bad luck that it happened two weeks after you moved in, instead of two years. It was going to happen sometime. One last thought, unless you want to re-pave the driveway anyway, look into one of these companies that does trenchless sewer replacement. They really are amazing. The City of Piedmont where I used to live replaced all of the sewer mains in the streets that way, and instead of digging up the whole length of every street, they just had to dig a hole every few hundred feet, and put in the machine that crushes the old sewer outward from the inside, and then shoves a new flexible sewer line into the channel made by pulverizing the old line. Going under a driveway that way will probably save a lot of money, and definitely a lot of hassle.