Evidence of infestation is called SCHEDULE ONE; and "usually" the Seller pays for this.
Evidence of a future problem is called SCHEDULE TWO, and the Buyer usually inherits this.
Rotted wood, or "Dry Rot" is usually labeled a Schedule One problem, (it normally does not have anything to do with termites, and, being caused by moisture, is a misnomer at dry rot.
If it is a small area, you are probably talking about a few hundred dollars: I wouldn't think that this is worth losing the deal over; just fix it and move on.
Good luck and may God bless