Really? I can't believe that this is even a question. Ofcourse the seller has to disclose. The best way to handle this if you are the seller is to have a pest control company come in and kill the bugs, then disclose the fact that they were there and that they have been dealt with..Then offer a follow up treatment if needed. Always, always, always disclose...If you are the buyer and you suspect foul play before you are out of your inspection period, drop the deal and get a better home. There are plenty out there.