MURDER? SUICIDE? BUYER BEWARE!

There is a murder/suicide in a home.  The home is later put up for sale.  Must the seller disclose to potential buyers that the tragedy took place in the home? 

To answer that question, some background is in order.  In the beginning, there was caveat emptor – Buyer Beware!  While the saying is written in Latin, it apparently did not come down from Roman law – but made its first appearance in about 1534 in English law, a case on horse trading, when Fitzherbert set down in his Boke of Husbandrie: "If he be tame and have ben rydden upon, then caveat emptor."  

The seller owns the merchandise or property being sold.  He knows all of its secrets.  If you are considering buying it, then you need to do your homework, ask questions, protect yourself in the legal document.  If the seller represents that something is true, then put this promise into a binding legal agreement.  If you want to find out about the property, create a period of time, a “due diligence” period, when you are granted access to the property, ask for records, talk to neighbors, have your inspector out there inspecting things.  Because once you have bought property, then you own it, warts and all.  The roof leaks?  The basement is wet?  Termite damage?  Once you have bought the property, you have bought those issues as well.  (With some exceptions – if the Seller has lied, or hidden items from you, that can change the result). 

This was a good workable rule for feudal and early American society. 

But as government has become more protective of its citizenry, it has passed more and more consumer protection laws such as implied warranty and disclosure laws that seek to level the playing field a bit.  In 1996, the Pennsylvania legislature followed the majority of states in adopting a seller disclosure law for real estate.  The law requires the disclosure of certain specific items, with a required form, and also reaches further to cover “material defects”, which are defined as:

“A problem with the property or any portion of it that would have a significant adverse impact on the value of the residential real property or that involves an unreasonable risk to people on the land.”

The law, even in its infinite wisdom, cannot conceive of every which way that human interaction can produce chaotic results.  And so we have trial courts to sort it all out in the first place, and then appellate courts, to decide what cases fall within and without of the broad lines that the legislature uses to sketch out the laws. 

So in 2014, what happens if there is a murder/suicide in a home?  Must that be disclosed to potential buyers?  

The Pennsylvania Supreme Court just addressed that subject.  A husband had killed his wife and then himself in the home, and the crime was well publicized.  Buyer No. 1 bought the house from the Estate, put in several thousand dollars of renovations, and then put the property up for sale.  When you sell a property, you need to fill out and give a Seller Disclosure form.  Buyer No. 1 asked the realtor, and an attorney, did this murder have to be disclosed?  Both did their homework, and found that there was no law in Pennsylvania on the subject.  The Seller did not disclose the murder.  Buyer No. 2, an out of state buyer, bought the property.  When she found out about the murder from her new neighbors, she sued the seller and the real estate agents. 

Disclosure of murder is not specifically covered by the Seller Disclosure law.  But it could conceivably be covered by the catchall provision if a court found that a murder was a “ … problem with the property or any portion of it that would have a significant adverse impact on the value of the residential real property …” 

In a thoughtful opinion, the court explored this issue and the larger issue - whether “psychological stigmas” are material defects in a property.  If a murder had to be disclosed, then the court asked “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?” 

Requiring a seller to find out and disclose the entire realm of events that occurred in, or were associated with, the property, and that some people might find objectionable, would be too great a task for sellers.  The court concluded that “(t)he 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.”  The unanimous court held that “… purely psychological stigmas are not material defects of property that sellers must disclose to buyers.”  

So now you know.  Buyer Beware! 

[To read the court’s full opinion, go here:  http://www.pacourts.us/assets/opinions/Supreme/out/J-87-2013mo%20-%201018811082429662.pdf?cb=1 .]