It is probably too late to give you an answer but, in the Buffalo-Erie County area, we need attorneys to represent buyers and sellers. Your best bet in this situation or another like it is to consult with your attorney. One question, How did you become aware of another crack after the home inspection?
Joe Sorrentino

Cracks in foundations are always disconcerting to buyers, but quite often they are not structurally significant. While there is no absolute determination without physically reviewing the conditions, a general rule of thumb is that vertical cracks are typically not concerning unless one of the following is true:

1) The plane of the wall is broken (one part is shiftin away from the other)
2) The crack exceeds 3/8 inch in width
3) There is water penetration.
4) There are signs of bowing or other stress-related issues.

Horizontal cracks are almost universally bad news.

There are a lot of variables that we dont know here (type of foundation, materials, age of home, method of repair, etc) so I can't tell you about whether this is or is not an appropriate way to handle it.

When in doubt - call in a structural expert (engineer). If you wish to bakc out, contact your agent (and possibly and attorney).

I can't answer whether or not it is too late to cancel the agreement, but I can tell you that if you have concerns about the cracks, do not let this go! We purchased a sinking home after the sellers, our agent, AND the inspector said there were no problems. If you are concerned, get a structural engineer to check the house (it is worth the cost and a lot less than what you'll pay if there is a structural problem) or have a soil sample done. Having the seller "fix" the cracks is not the answer. To really fix cracks in a faulty foundation requires a lot more than a patch. You cannot be too cautious.

Jim, In the greatest state of California this would entail further disclosure by the Seller which would trigger the 3 day recission period and would allow you to either disapprove the condition, renegociate or cancel the contract. I would check to see if this applies in your state. I never interpret what a "crack" might signify only that there is a "crack". What did you home inspector say initially? Did he reccomend further inspection? TALK TO YOUR AGENT!!

I think the bigger questions is "are these cracks showing a faulty foundation, or are they normal?" Settlement cracks are very common in concrete foundations. Concrete cures over a very long period of time and it actually rare not to see even small ones. It is even common in brand new construction. Unless they are quite large(more than a finger's width) they typically do not effect the structural integrity of the home. I might suggest taking some pictures of them and showing them to the inpector who inspected the home to see what his opinion might be. If the seller fills or patches the cracks that could be a sufficient remedy to the situation, again, though, consult the inspector. Additionally, if it is recommended to have a structural engineer look at it, you should know that can be pricey and that's when I would get the attorneys involved. But I think the main issue here is determining if the cracks are anything serious. In my experience it is rare that they are, and when they are, it is obvious that there is a structural integrity issue.

Jim, If you are working with a real estate agent they should explain all the contingencies to you. Contracts can be written many ways and you might not have a right to any escrow returns. You should have a copy of your contract, look for inspections clauses and seek local advice quickly.

We are under a purchase agreement, but the inspection period expired before this crack was discovered. We're not sure what we want to do yet, we were just wondering if we wanted to cancel the contract because we discovered further foundational problems that were likely to cause problems in the future we could.

Are you already in contract? If so, is there a contingency upon home inspection? Did the inspector state what the cracks were from? Is it a new home or an old one? Could it be settling cracks? How much confidence to you have in your inspector...is he certified? PE?