Legal Question in Real Estate Law in New York

Sue the inspector if the defect was apparent upon inspection. If the seller provided disclosure instead of giving you $500 credit at closing, and had knowledge of the defect, go after him also.

You need to establish whether this "melt-down" might be covered by your homeowners' insurance. Note that the statute of limitations to sue the seller/installer is six years, and you should be looking at that as a fallback in case your insurance does not come through. And you're going to need to engage an attorney.