State law does not require disclosure of historical scars when home is sold

Trying to sell your house, but you’re having nightmares every night and don’t know why? Or are there odd noises at all hours of the night with no discernable cause?

Or did someone die in the house, violently by someone else’s hand, or their own, or perhaps of natural causes?

Maybe a previous owner had a long history of violent mental illness, or perhaps someone operated a drug lab there once.

Though those scenarios may or may not create uncomfortable living conditions for an unwitting purchaser of such a home, there is no law on the books in Pennsylvania requiring home sellers to disclose such “psychological defects” – yet.

Most states, including Pennsylvania, require in their real estate law that sellers disclose “material defects” meaning “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,” according to the Real Estate Seller Disclosure Act of Pennsylvania.

“Material defects” include such things as structural concerns, the age of the roof and shingles, leaks in the foundation and walls, existing mold and mildew and any problems with sewage or water sources.

Material facts also can include other items that affect the house’s value such as total square footage, the amount of property taxes, details about individuals who claim to have an interest in the house or overlaps on adjacent properties.

Items not considered material facts include personal information about a seller, such as pending foreclosure or divorce, illnesses of the seller and the seller’s reasons for moving such as the previously discussed “paranormal activity.”

Realtor Chris Gilbert, of Remax in Mansfield, said there is a court case in process concerning the validity of such “psychological defects,” referring to the Milliken-Jacono case in southeastern Pennsylvania.

“A lower court decided it didn’t have to be disclosed, but it was remanded back to Delaware County, where a jury will decide,” Gilbert said.

According to the Daily Times of Delaware County, the buyer, Janet Milliken, claims she was unaware until September 2007 that the previous owners – Kostantinos and Georgia Koumboulis – had died in a murder/suicide in February 2006. She filed a complaint in the Delaware County Court of Common Pleas against the Jaconos and real estate agents involved in the transaction, alleging fraud and negligent misrepresentation, as well as a breach of the Real Estate Seller Disclosure Law and a violation of the Unfair Trade Practices Consumer Protection Law.

Judge George Pagano granted summary judgment to the defendants in 2010, and Milliken appealed to the Superior Court of Pennsylvania.

A majority opinion of the higher court issued last month affirmed the lower court’s ruling, finding the murder-suicide was not a “material defect” as defined by the RESDL and Milliken therefore could not hope to win at trial.

The majority opinion goes on to say that psychological damage will decrease over time as the crimes in question recede from public memory, that any such psychological effect will vary from person to person and that it is impossible to assign a monetary value to the psychological damage to a house caused by a murder.

Requiring such disclosures, absent the express written intent of the Legislature, also could open the floodgates for disclosure of other “subjective defects,” such as the number of burglaries or shootings in the neighborhood, the majority found.

There has only been one other case brought before a court, in Beaver County. That was the Bucowski vs. Polumbo case four years ago, and the court ruled that it was not required to be disclosed, but “this is an ongoing discussion,” he said, especially in more urban areas with higher crime and suicide rates.

“We have an advantage that we live in a small community where we, as a whole, won’t have that,” he said.

The take-away, Gilbert said, is “buyer beware.”

“If you are looking to buy a house, I would encourage potential buyers to talk to the neighbors. If someone is murdered or shot themselves, they will know,” he said.

Potential buyers also should Google the address and prior owners.

“If it is out there, you will find it. It is a sticky situation. I ask sellers to fill out the disclosure as they would want someone to fill it out for them,” he said.

For now, at least, it is not covered specifically on the Pennsylvania forms, so it is not part of the standard forms, he added.

It is up to the courts to decide.

According to Gilbert, it is hard to know who died in a house, and how, depending on how many generations have lived there.

In California, the Association of Realtors civil code states death on a property need not be disclosed if it occurred more than three years prior to the sale.

The statute does not require disclosure of a death more than three years old unless the buyer asks.

“The fact is we don’t know who died in these houses,” he said.

Gilbert said there supposedly is a house in Mansfield that was owned by an abortion doctor and abortions likely were performed there before it was made legal in 1973.

“It is an extremely difficult situation,” he said.

The very building where Gilbert’s office is located in Mansfield formerly was used as a funeral home, Gilbert said.

“Before that it was a maternity hospital, so I am sure there were deaths in childbirth,” he added.

“We could make an argument that if disclosed a lot of them have things that might bother a prospective buyer,” he said.

The other thing is, “you are only required to disclose what you know,” he said.

Many brokerage firms have supplemental disclosure forms that specifically inquire about death.

To avoid liability, it is recommended the seller disclose a death if it occurred within the last three years and let the buyer decide. Some states have even gone further requiring home sellers to disclose “stigmas” attached to a property, which can include proximity to homeless shelters and if it was the scene of a violent crime.

According to a study by two business professors at Wright University, houses where murder or suicide have occurred can take 50 percent longer to sell, and at an average of 2.4 percent less than comparable homes.

A California appraiser who specializes in diminution in value issues says that a well-publicized murder generally lowers selling price 15 to 35 percent.

In New York state, it is illegal to sell a house without disclosure of paranormal activity, and in Massachusetts, the law says you must disclose if the property has been “psychologically impacted,” by the result of facts or suspicions including, but not limited to, the following:

That an occupant of real property is or has been suspected to be infected with the Human Immunodeficiency Virus or with Acquired Immune Deficiency Syndrome or any other disease which reasonable medical evidence suggests to be highly unlikely to be transmitted through the occupying of a dwelling.

That the real property was the site of a felony, suicide or homicide.

That the real property has been the site of an alleged para-psychological or supernatural phenomenon.