Earlier this week, the highest court in the Keystone State ruled [PDF] against a homeowner who was apparently not terribly pleased to find out — after she’d moved in — that the Delaware County house she’d paid $610,000 for had recently been the site of a murder/suicide.
The tragic event occurred in Feb. 2006, when the then-homeowner killed his wife before taking his own life. In September of that year, a couple purchased the property at auction for $450,000. They then put additional money into renovations with the intention of reselling.
The sellers checked with several people who should know about these things — their attorney, their real estate agent, the Pennsylvania Real Estate Commission — to learn whether the murder/suicide was a material defect requiring disclosure pursuant to the Real Estate Seller Disclosure Law. Everyone they talked to told them the same thing — no, they did not have to disclose the horrible incident.
So when the house went up for sale again in June 2007, there was no mention of the tragedy in the disclosures.
A buyer who was moving from out of state snapped up the property, but began to suspect something was up while she waited for the closing date to arrive. The biggest tip-off was the $160,000 price difference between what she’d agreed to pay and what the sellers had paid for it less than a year earlier.
Her real estate agent suggested that it might have been a foreclosure sale, but the buyer ““intuitively thought there was something more to it.”
Had she Googled the names of the previous owners, she would have turned up numerous headlines about the murder/suicide, but she apparently did not, as it wasn’t until after she’d moved into her new home that she learned what had once happened there.
And so she sued the sellers and real estate company Re/Max, alleging common law fraud, negligent misrepresentation, and a violation of the state’s Unfair Trade Practices and Consumer Protection Law.
The trial court agreed with the defendants and granted summary judgment, finding as a matter of law the murder/suicide was not a material defect required to be disclosed by state or common law.
In appealing the case, the home buyer argued that the sellers used a “broad” disclosure form that goes beyond what state law requires but still did not include the disclosure of the murder/suicide.
But the Supreme Court found that just because the sellers revealed some things they weren’t required to disclose doesn’t mean they must then disclose everything that they knew about the home.
“Voluntarily revealing more than is required does not create additional involuntary requirements,” reads the court’s opinion.
The buyer also contended that the sellers’ decision to ask all those experts about whether or not they needed to disclose the murder/suicide was sufficient to create a genuine issue of material fact as to whether the murder/suicide was a material defect.
The court disagreed, saying that, “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… are palpable, and the varieties of traumatizing events that could occur on a property are endless.”
The problem, explains the court, is that it’s impossible to quantify the psychological impact of the various forms of fatal tragedies that could occur.
“[D]oes a bloodless death by poisoning or overdose create a less significant ‘defect’ than a bloody one from a stabbing or shooting?” asks the court. “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?”
The court described the effort of trying to answer these questions as “a Sisyphean task.”
“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,” reads the opinion. “We hold that purely psychological stigmas are not material defects of property that sellers must disclose to buyers.”
As we’ve pointed out before, New York state requires that sellers of “haunted” houses — not merely houses that someone believes to be haunted, but homes that have been previously publicized or listed as being plagued with poltergeists — must disclose this fact.