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Jane,
I was just in Sonoma over the weekend and had a great time. Do the disclosures say anything about the subfloor damage? Most foreclosures do not disclose anything as they have never occupied the property so there is no recourse if that is the case. Did the buyers have a home inspection done? Did it divulge anything in regards to the subfloors? If an inspector blatently missed it and should have caught it, there may be some recourse there. If it was "hidden" and there was no way an inspector could have caught it, then yes, my opinion is that the buyers just have to deal with it.