My partner, Abe Reich, recently successfully argued before the PA Supreme Court a case determining “whether the occurrence of a murder/suicide inside a house constitutes a material defect of the property, such that appellees’ failure to disclose the same to the buyer of the house constituted fraud, negligent misrepresentation, or a violation of the Unfair Trade Practices and Consumer Protection Law’s (UTPCPL).” The Court held that “a murder/suicide does not constitute an actionable material defect.” Although it is an unusual setting, the case has broader applications.
In Millliken v. Jacono, the Defendant purchased a house that was the location of a murder suicide by its prior owners. After renovating the property, the Defendant listed the property for sale and informed their listing agents of the murder suicide. However, after consultation with attorneys and representatives of the PA Real Estate Commission, she did not disclose the murder/suicide as a known material defect in the Seller’s Property Disclosure Statement.
The Plaintiff purchased the property and after moving into the house learned of the murder/suicide. She claimed that had she known of the incident, should would not have purchased the house. She sued the defendant and the listing agent for fraud, negligent misrepresentation and a UTPCPL violation based on the Defendant’s failure to disclose the murder/suicide.
Defendants’ moved for summary judgment arguing that the Plaintiff’s claim failed as a matter of law. The trial court granted summary judgment dismissing the case, a three-judge panel of the Superior Court reversed the trial court and an en banc Superior Court, on reconsideration, affirmed the trial Court. Plaintiff appealed to the PA Supreme Court.
The PA Supreme Court affirmed. It explained, “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. 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, even under the objective standard posited by appellant, are palpable, and the varieties of traumatizing events that could occur on a property are endless. Efforts to define those that would warrant mandatory disclosure would be a Sisyphean task.”
The Court further explained that, even if an event is such a majority of the population would find disturbing, and a certain percentage of the population may not want to live in a house where any such event has occurred . . . this does not make the events defects 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.”
Therefore,, even though the underlying facts are unusual, there are applications to other settings. For example, an aspect of a house that negatively impacts value does not necessarily need to be disclosed. Further, it appears the Court is limiting required disclosures to “defects in the structure itself” and the “quality of the real estate.”