Would You Buy a Home that was a Crime Scene?

Posted February 4, 2013 in Real Estate Your Home & The Law by

Deserted house

iStockphoto/Thinkstock

A Pennsylvania woman is suing a homeowner and real estate agent who chose not to tell her the home she bought was the site of a bloody murder-suicide. After mixed opinions from lower courts, the state appeals court threw the suit out in December 2012. Janet Milliken, the jilted home buyer, is now appealing to the state Supreme Court.

Milliken bought the home in 2007, moving from California to Pennsylvania with her two teenage children. Her husband had recently died, and the Millikens wanted to be closer to family back East. But shortly after moving in, Milliken learned from a neighbor that a previous occupant, Konstantinos Doumboulis, allegedly shot and killed his wife in the master bedroom before turning the gun on himself. Before Milliken could decide how to tell her children, they learned about it from friends.

The family no longer felt comfortable in the home after learning of its history, so Milliken filed suit, alleging a “deliberate choice not to disclose the home’s recent past.”

 

Disclosure Not Required

Court documents confirm that the sellers and real estate agent did discuss the murder-suicide and their disclosure obligations. But after calling the Pennsylvania Association of Realtors Legal Hotline and reading the Pennsylvania Real Estate Seller Disclosure Law, they concluded they weren’t obligated to say anything.

The trial judge agreed, dismissing the suit and determining that the home’s grisly past was not a “material defect” requiring disclosure. But the superior court reversed the dismissal, arguing that a jury should decide what constitutes a material defect. Now that the appeals court has sided with the sellers, the Pennsylvania Supreme Court could settle what remains a murky issue in several states.

 

State Laws Vary

Pennsylvania’s real estate disclosure law doesn’t specifically address non-physical defects like stigmas associated with notorious crimes, but more than half of the states have passed laws on the topic. And many of those laws specifically protect home sellers and their agents from having to disclose such information to buyers.

In Colorado, brokers are protected from nondisclosure of “any facts or suspicions regarding circumstances which may psychologically impact or stigmatize” a property. Maryland’s sellers and brokers don’t have to report homicides, suicides, accidental deaths, natural deaths or felonies that occurred in a home.

But in California, a death that occurs in a home within three years of an offer to purchase is considered a material defect that needs to be reported. And like several other states with stigmatized property laws, California home sellers must answer truthfully when specifically asked about murders or suicides on the property, no matter how long ago the incidents took place.

These statutes vary widely in terms of who they protect, how long they apply to stigmatized homes and what types of stigmas are covered. Some states, like Massachusetts, even protect sellers from having to disclose “parapsychological or supernatural phenomenon.”

 

Do the Right Thing

Attorney James L. Goldsmith headshot

James L. Goldsmith

The lack of any Pennsylvania law relating to stigmatized homes seems to be working against Milliken’s lawsuit, but real estate attorney James L. Goldsmith notes one important exception to a Pennsylvania home seller’s nondisclosure protection.

“If the suicide is so notorious that it markedly impacts the value of the home, it should be disclosed,” Goldsmith wrote. “The Seller Disclosure Law requires disclosure of a material defect which is defined as ‘a problem with residential real property or any portion of it that would have a significant adverse impact on the value of the property.’”

In Milliken’s suit, she cites reports from two real estate appraisers who said that the murder-suicide lowered her home’s value by as much as 15 percent.

Tanya Marchiol headshot

Tanya Marchiol

“In a known case of a murder that occurred in the home, the value of the home may be affected dramatically,” said real estate investor Tanya Marchiol. “Even rumors will affect your sales price. Bottom line: this poor woman should have been informed of the murder-suicide at her home by her realtor, and hopefully the law will prevail on the side of justice in this matter.”

The superior court that overturned the suit’s dismissal even noted that while the law doesn’t explicitly require disclosure, telling Milliken would’ve been the right thing to do.

“The Sellers and Agents made multiple inquiries to determine whether they were required to disclose the murder/suicide to Buyer,” the court wrote in its opinion. “Instead of expending this effort, they would have been better served by simply acting in good faith and disclosing this fact.”

Do you think home sellers should be required to disclose murders and suicides to interested buyers? Let us know in the comments section below.

Tagged as: , , , ,