Wednesday, July 23, 2014

Pennsylvania Real Estate - murder/suicide does not constitute an actionable material defect

This week in Milliken v. Jacono, The Pennsylvania Supreme Court decided the issue of whether the sellers were required to disclose that a murder/suicide had occurred at the residence sometime before the sale. The court determined that "purely psychological" stigmas are not material and do not require disclosure.

Part of the court's reasoning:

Image courtesy of Salvatore Vuono

"... Regardless of the potential impact a psychological stigma may have on the value of property, we are not ready to accept that such constitutes a material defect. The implications of holding that non disclosure of psychological stigma can form the basis of a common law claim for fraud or negligent misrepresentation, or a violation of the UTPCPL’s catch-all, even under the objective standard posited by appellant,6 palpable, and the varieties of traumatizing events that could occur on a property are endless. Efforts to define those that would warrant mandatory disclosure would be a Sisyphean task. One cannot quantify the psychological impact of different genres of murder, or suicide — does a bloodless death by poisoning or overdose create a less significant “defect” than a bloody one from a stabbing or shooting? How would one treat other violent crimes such as rape, assault, home invasion, or child abuse? What if the killings were elsewhere, but the sadistic serial killer lived there? What if satanic rituals were performed in the house?

It is safe to assume all of the above are events a majority of the population would find disturbing, and a certain percentage of the population may not want to live in a house where any such event has occurred. However, this does not make the events defects in the structure itself. The occurrence of a tragic event inside a house does not affect the quality of the real estate, which is what seller disclosure duties are intended to address. We are not prepared to set a standard under which the visceral impact an event has on the populace serves to gauge whether its occurrence constitutes a material defect in property. Such a standard would be impossible to apply with consistency and would place an unmanageable burden on sellers, resulting in disclosures of tangential issues
that threaten to bury the pertinent information that disclosures are intended to convey..."

The court also talks about time and renovations that could remove or even enhance the stature of the property. But it is clear that a seller is not required to proactively disclose such events or character assigned to the property.

That doesn't mean you cannot ask. Also, the court notes the murder/suicide in this matter was well publicized and easily discoverable by the buyers. This case shows why potential buyers need to prepare when they are looking for a home. They need to know what they want and, moreover, what will be a deal breaker. They should create a list of the
se desires and show stoppers so they don't get caught up in the emotion of a particular property and overlook a deal stopper.

My wife taught me that. She grew up in a home that had water problems in the basement. She never wants to deal with that again. So when we were looking for both of our homes, one of her first stops was in the basement. She would also look around the yard to look for signs of standing water. It didn't matter how beautiful the property, If she saw a wet sump area or saw signs of puddles around the home, it was off the list... period! Do you know how many homes that rules out in southeastern PA?

The bottom-line is, you are responsible to do some of your own research on the properties you are considering.

For a summary of this decision and a copy of the opinion, you can go here:

No comments:

Post a Comment