For instance, in my area of FLorida, do you need to disclose that the oak in your neighbors yard could become a eagles nest this spring therefore placing real restrictions in what you can do in your back yard between Nov and March. An extreme example of course. The argument will be...should you have known? It has been in the news previous years of other property owners who were ambushed by such a predicament. Should you have know? Should you have anticipated? Should you have speculated? Where is the limit for disclosure?
It's a losing situation. The banks who sell large volumes of real estate don't disclose a thing. Investors who never live in the home they sell need not disclose a thing. A residential home seller should have the same option, but they do not.
In your case, the stain was known and one could argue was actually concealed from the buyer by a strategically placed ottoman. You could argue that the buyer had 'final walk through' opportunity to see a vacant home in which nothing was concealed. As others have said, you should offer to do the right thing. You may find out they already knew and dismissed the issue because they had grander plans for that floor. Your integrity, however, will be the quality that will be remembered.
The Marie Souza Team - Top Selling on Cape Cod
Cape Cod Real Estate Services
As for whether or not they can sue you, I'd suggest contacting a lawyer.
YES, I'm in favor of over disclosure versus under disclosure. If the stain is huge and obvious, you really have two choices; disclose or change the carpet. If you leave a project for the buyer to address, expect a lower offer and final selling price. Since you mention an inspector missing it in what could be taken as an attempt to hide it, DISCLOSE.
The resolution will be cheaper and friendlier if you make the buyer aware. Carpet is relatively cheap, so expect to do at least a partial replacement.