United States: Real Estate Sellers Not Required To Disclose Murders, Suicides And Other ‘Psychological Damage’ To Property

In a recent decision dated December 26, 2012, the Pennsylvania Superior Court reaffirmed that psychological damage to real property is not considered a material defect in the property that must be revealed by the seller to the buyer. This unique case involved a murder that took place in a property, which was not disclosed to the buyer. "The fact that a murder once occurred in a house falls into the category of home-buyer concerns best left to caveat emptor–let the buyer beware," the appeals court wrote.

In Janet S. Milliken v. Kathleen Jacono and Joseph Jacono and Cascia Corporation, trading as Re/Max Town & Country and Fran Day and Thomas O'Neill and John Restrepo and Fox & Roach LP, 2012 Pa. Super. LEXIS 4105 (December 26, 2012), Ms. Milliken sought review of the grant of summary judgment in favor of the defendant, the home sellers and their agents by the Court of Common Pleas of Delaware County.

Ms. Milliken, the buyer, claimed that the trial court erred in granting the motions for summary judgment on several claims arising from the sale of a house without the sellers or agents disclosing that a murder/suicide had occurred in the house. The previous owner of the property allegedly shot his wife and himself at that property. The sellers purchased the property at a real estate auction and subsequently sold it to the buyer, Ms. Milliken. Ms. Milliken alleged that she was unaware of the murder/suicide until three weeks after she moved into the property.

The Superior Court affirmed the order granting summary judgment in favor of the sellers and their agent. In so holding, the court began by noting that each of Ms. Milliken's claims on appeal relied, first, upon the existence of a material defect in the property and, second, upon the failure to reveal, or the concealment of, that defect or some deceptive conduct connected to that defect. In each instance, Ms. Milliken put forward as the offending defect certain psychological damage to the property occasioned by the murder/suicide of the prior owners. The court opined that if the murder/suicide cannot be considered a defect legally, or if the sellers were under no legal obligation to reveal this alleged defect, there can be no liability predicated upon the failure to so inform. The court found that the psychological damage to a property cannot be considered a material defect in the property that must be revealed by the seller to the buyer.

In ruling on the appeal, the Superior Court analyzed the term "material defect" as that term is defined under the Real Estate Seller Disclosure Law ("RESDL"), which is defined as follows:

The court noted that the RESDL actually identifies the particular classes of defect that must be revealed. In doing so, the court opined that the RESDL demonstrates that the legislature did not intend that sellers be legally required to reveal something such as psychological damage from a murder/suicide. In an examination of the mandatory disclosures under the RESDL, the court found that each deals with either the actual physical structure of the house, its components, condition of the cartilage, potential legal impairments attached to the property and hazardous substances on the property. The court stated that a requirement that sellers of real estate reveal that a murder once occurred on the property goes to the reputation of the property and not its actual physical structure.

The legislature did not require disclosure of psychological damage to a property. The buyer argued, however, that if the legislature had intended to exclude a murder/suicide as a material defect, it would have done so by express language excluding psychological damage. The Superior Court disagreed with the buyer's argument, finding that psychological damage is so different from the physical and legal defects listed in the RESDL that it is plain that the legislature intended not to include it. Because the legislature limited required disclosures to structural matters, legal impairments and hazardous materials, the court noted that the extension suggested by the buyer would be both unwarranted and legislative in nature.

The court found other interesting problems as well with Ms. Milliken's argument. First, how recent must the murder be that the seller must inform the buyer? What if the matter happened 100 years ago? What if numerous owners lived in the house in the interim? In fact, Ms. Milliken was one buyer removed from the murder/suicide at issue. Second, how can a monetary value possibly be assigned to the psychological damage to a house caused by a murder? The psychological effect will vary greatly from person to person. Third, is this disclosure limited to murder, or must other crimes be revealed? A buyer might want to know that a house has been burgled five times in the last year because that might indicate that the neighborhood is dangerous. What about crimes that did not occur on the property itself? Suppose there had been a number of shootings in the neighborhood. Further, a buyer might want to know that a child molester lived in the neighborhood.

There are countless scenarios which could constitute psychological damage to a house. The court found that these scenarios fall into the category of home buyer concerns best left to caveat emptor. The court was concerned with opening the flood gates, finding that if psychological defects must be disclosed, then we are not far from requiring sellers to reveal that a next door neighbor is loud and obnoxious, or on some days you can smell a nearby sewage plant, or that the house was built on an old Indian burial ground.

In affirming the summary judgment order granted to the seller, the Superior Court solidified the law in Pennsylvania that sellers should only be required to reveal material defects to: the actual physical structure of the house, with legal impairments on the property, and with hazardous materials located at the property. As stated by the court in affirming the lower court's granting of summary judgment, "To allow consideration of possible psychological defects opens a myriad of disclosures that sellers will need to reveal, and starts a descent down a very slippery slope."

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