Court Says Seller Has No Duty to Disclose Murder-Suicide
Gina Passarella, The Legal Intelligencer
July 23, 2014
The occurrence of a murder-suicide in a home does not create a material defect that must legally be disclosed to a potential buyer, the state Supreme Court ruled Monday in a case of first impression.
“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,” Justice J. Michael Eakin said for the court in a case out of Delaware County. “The implications of holding that nondisclosure 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 … are palpable, and the varieties of traumatizing events that could occur on a property are endless.”
The case stemmed from the sale of a home in Thornton, Pa.
While certain events may be disturbing to the population and may cause some people not to want to live in a home where those events occurred, Eakin said the events don’t cause a defect 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,” Eakin said. “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.”
Eakin asked where the line would be drawn in terms of what should be disclosed and what should not. He asked whether a bloodless death by poisoning or an overdose would be a less significant defect than someone dying from a stabbing or a shooting. He asked how crimes such as rape or child abuse would be treated under the disclosure rules if applied as the buyer in Milliken v. Jacono asked.
Eakin took the hypothetical a step further, pondering what would happen if a crime didn’t happen in a house, but a killer lived there.
“Moreover, considerations such as the time that has passed since the event, and changes and renovations made to the property, have a significant effect on the impact of the event,” Eakin said. “Some graphic events, having matured into historical curiosities, may even increase the value of the property.”
Eakin said granting the remedy appellant-homebuyer Janet S. Milliken is seeking—the rescission of the contract and repayment of any associated costs—is extreme, particularly given her own expert said the value usually returns to normal within three to seven years. Eakin further noted it is nearly impossible to assign a monetary value to psychological stigmas.
Milliken also had a suspicion about the previous property owners and had the tools to research the “well publicized” murder-suicide that took place on the property, Eakin said. But Milliken failed to do that and bought the property anyway, he said.
Eakin was joined in his opinion by Chief Justice Ronald D. Castille and Justices Thomas G. Saylor, Max Baer, Seamus P. McCaffery and Correale F. Stevens. Justice Debra M. Todd filed a concurring opinion that Stevens joined.
Todd noted that Milliken’s claims for misrepresentation “rise and fall” on whether a murder-suicide was a material defect. Todd agreed with the majority that such an occurrence is not a material defect requiring disclosure.
Milliken sued sellers Kathleen and Joseph Jacono and broker Re/Max for claims of fraud, negligent misrepresentation and Unfair Trade Practices and Consumer Protection Law violations. A Delaware County Court of Common Pleas judge threw out her claims on summary judgment.
In November 2011, a split three-judge panel of the Superior Court ruled that a jury should decide whether the sellers of the $610,000 home had a duty to tell Milliken about the murder-suicide. However, a divided en banc panel reversed the ruling in December 2012, holding that a murder-suicide does not constitute a material defect to real estate requiring disclosure under the Real Estate Seller Disclosure Law.
The Jaconos had purchased the property from the estate of the man who, in 2006, killed his wife in the home and then killed himself, Eakin said in his opinion. The murder-suicide was highly publicized in the local media and on the Internet, Eakin said.
After investing in renovations, the Jaconos put the property up for sale in 2007 and informed their listing agents at Re/Max of the murder-suicide. The Jaconos consulted with their real estate agent, an attorney and representatives of the Pennsylvania Real Estate Commission about whether the event was a material defect requiring disclosure. The attorney and commission representatives said it was not. While the agents suggested it may just be good to disclose the event and “‘get it out there,’” the Jaconos decided not to disclose it, Eakin said.
Milliken lived in California and was unable to talk to any of the neighbors prior to purchasing the property. She learned of the event from one of the neighbors after moving into the home, Eakin said.
Timothy F. Rayne of MacElree Harvey represented Milliken. Abraham C. Reich of Fox Rothschild represented Re/Max and Glen Mills, Pa.-based sole practitioner J. Scott Watson represented the Jaconos.
“I think Justice Eakin properly realized the slippery slope that would occur by concluding that a psychological stigma could impact the value of property and therefore constitute a material defect,” Reich said. “The legislature spoke when it enacted the real estate disclosure law and enumerated items that were required to be disclosed, all relating to physical items relating to the property or items impacting the title.”
Reich said it is for the legislature to define which if any psychological events should require disclosure, which he said some states have done.
Rayne and Watson did not return calls seeking comment.
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