I doubt it can be confidential, because it will be a major decision making factor in the transaction.
I just closed a house in similar situation, the seller sued builder for construction defects. After seller disclosed the fact that there was a lawsuit, all offers (7 of them) all withdrawn, I am the only one still on board.
The seller said the law suit is bogus, because it is initiated by a lawyer. The lawyer knocked his door and asked him whether he want to be part of the law suit and no cost to him, so he said OK. The seller finally received about 15K settlement as part of overall agreement with the builder (of course the lawyer also made big money), but he said there is no defect to the house.
The seller agent send me all the documents (about 100 pages), and I went through every claims. I finally conclude that lawsuit is bogus and the claims are trivial. The house is in good shape.
But since all other buyers are scared away and I am the only one left, I comfortably negotiated a sweet deal without any competition.
Of course, I ordered an inspection and made sure the inspector paid attention to every detail. And again, the inspector also concluded the house is in normal condition.
So you must see the detail of the lawsuit, and decide whether it is worth to take the risk.
