The two extremes are;
The Sellers who LIVED in the house for a long time, and have first-hand knowledge about the property.
And the Bank, who OWNS the property, but has never LIVED in it; would no first-hand knowledge about anything.
Then there is the absentee owner; who would know some times, and not know others: They would be required to disclose what they did know.
Doesn't that seem reasonable?
The Disclosure rules were set up for reasonable, honest people.