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Dial C for Caveat Emptor

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Pennsylvania’s superior court has ruled that a murder-suicide occurring in a home is not a material defect requisite of disclosure in that home’s sale. Or, in other words, while a murder-suicide occurring in a house might be “psychological damage” to the property or its reputation, realtors don’t have to disclose psychological damages.

This case arose when a man in West Chester, PA, allegedly shot his wife and then killed himself in their home.  At a real estate auction, a family purchased the home. After that, the family and their realtor, Re/Max, listed the house for sale and confirmed with both the Pennsylvania Real Estate Commission and the Pennsylvania Association of Realtors that they were not obligated to report the murder-suicide to buyers. They sold the house to a man who brought suit, apparently unaware of the alleged murder-suicide prior to purchase.

We’d love to have some sympathy for the guy, but, West Chester is a town of less than 20,000 people. Probably safe to say this story got a solid amount of local news coverage. If the buyer is a local, it’s hard to have much sympathy for him.

But, the murder-suicide was 7 years ago, and maybe he’s not from around there. He just lucked in to the bloody mess, and to make matters worse, his lawsuit is going to have a bit of a Streisand effect. Now everyone has been reminded of what happened in the home he purchased, making the stigma that much worse.

 

Most states don’t require this type of disclosure. Alaska requires sellers to report a murder or suicide occurring on the property within the preceding three years, if the seller is aware of said death. So, a smart seller could just avoid the requirement by waiting four years? Alaska also requires disclosure of any human burial sites on the property. There’s no time cap on that one, but who’s going to admit to knowing of human remains on the property? Doesn’t that mean the seller either bought the house, human burial site included, or buried someone themselves? Yikes.

California doesn’t require disclosure of any deaths occurring on the property if the death occurred more than three years prior to the property’s transfer, and hey, fun fact, it Cali also doesn’t require disclosure that an occupant of the property had AIDS. But, California also does not protect the broker, owner, or agent from any misrepresentations they make if a buyer asks a direct question about deaths occurring on the property.

Which leads us back to Pennsylvania. What happens there, now that a death on the property isn’t a material defect? If the buyer specifically asks, how can and should the seller respond? Is Pennsylvania going to take a page out of California’s book and not protect a seller who misrepresents? Can they refuse to answer? Can they say “not that’ I’m aware of” and be okay? What if it’s a murder and the alleged murderer has yet to be convicted? It’s a death in the house, and it may be known to be a homicide, but murder has some more elements to it. Maybe the house should get the presumption of innocence.

If the right not to disclose a murder becomes well known among house buyers, they can simply do an end-run around the rule by asking a direct question. “Do you know of any murders or suicides that occurred in this house?” Assuming the realtor won’t just lie, he would be pressed to say “I’m not going to answer that.” In a court of law, no inferences can be made by exercising the right to not answer a question, but the real estate business isn’t a court, and buyers can assume the obvious. In order to give an effective right not to disclose a murder or suicide, there’d need to be the right to lie, limited to an “I don’t know.”

If the seller refuses to answer, can the buyer interpret that refusal as a confirmation that something awful did happen there? In which case, the realtor revealed the answer anyway. Buyers are allowed to make obvious deductions; buyers aren’t a court of law; they don’t have to respect a right to not answer.


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