Can a buyer agree to waive the indemnity cap for one specific known issue in the deal?

It is more common, and generally cleaner, for the buyer to carve a specific known issue out of the general cap rather than to describe it as "waiving" the cap, but the practical effect can be the same. Where both sides already know about a particular risk, such as an ongoing dispute or a specific compliance gap, they can agree to address it through a special indemnity that sits outside the general representation-and-warranty indemnity structure entirely, with its own cap, or no cap at all, rather than trying to squeeze it into the standard mechanics built for unknown or general risks.

This approach tends to work better for both sides than simply agreeing the buyer can recover past the general cap for that one issue, because it avoids ambiguity about how the carve-out interacts with the basket, survival period, and other general limits. A buyer and seller who have identified a specific known issue during due diligence should work out a dedicated special indemnity for it as part of the disclosure and negotiation process, rather than leaving it to an informal side understanding.