PENNSYLVANIA SUPERIOR COURT WEIGHS IN ON MURDER/SUICIDE DISCLOSURE

By James L. Goldsmith, Esq.

On November 29, 2011, a three judge panel of the Pennsylvania Superior Court reversed a lower court decision that a murder/suicide which occurred in the home did not, as a matter of law, constitute a “material defect” and therefore did not have to be disclosed. The Superior Court remanded the case, Milliken v. Jacono, to the Delaware County Court for trial. There, a jury will determine whether the murder/suicide was indeed a “material defect” that should have been disclosed. It may also award monetary damages to the buyer.

The only other case involving a stigmatizing event that has been decided in Pennsylvania is Bukoskey v. Palombo, decided by Judge Kunselman of Beaver County four years ago. That case involved a suicide only. The court ruled that the suicide was not a legal issue that would “interfere with the use and enjoyment of the property” and disclosure was not required.

Of course, the Bukoskey and Milliken cases have their differences. Bukoskey involved a death-by-suicide and an unsuspecting buyer who purchased directly from the estate. Milliken involved a murder/suicide where the owner killed his wife and then himself in the property. The property was purchased seven months later by buyers who were aware of the deaths and who entered into an agreement to sell the property nine months later. It is the second buyer following the murder/suicide who filed suit claiming that the sellers breached the disclosure law.

The more significant difference between the two cases involves expert reports introduced in the Milliken murder/suicide case. Milliken hired two appraisers who each opined that the value of the property was diminished by as much as 10-15 percent as a result of the murder/suicide. The Superior Court seized on this information, noting that the definition of “material defect” found in the Real Estate Seller Disclosure Law includes “a problem with a residential real property or any portion of it that would have a significant, adverse impact on the value of the property or that involves an unreasonable risk to people on the property” (emphasis added). The Court felt that the sellers should have included notice of the murder/suicide in the catch-all provision of the disclosure form that asks sellers to disclose any material defects “not disclosed elsewhere on this form.”

In Milliken, President Judge Emeritus Kate Ford Elliott filed a dissenting opinion. Her dissent parallels the conventional thinking of most real estate pundits who have weighed in on the issue: a murder, suicide or combination of the two is not “a problem with the property”, but rather a problem with the inhabitants who engaged in the act(s). Judge Ford carefully analyzed the mandatory disclosures, noting “ . . . that each deals with either the actual physical structure of the house, its components, and the condition of the curtilage, potential legal impairments attached to the property, and hazardous substances on the property. 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. Plainly, the Legislature did not require disclosure of psychological damage to a property.”

So what does this all mean? For the first time an appellate court in Pennsylvania has ruled that a murder/suicide may have to be disclosed on the seller disclosure form. The ruling is fact-specific to this case where evidence suggests that the market value of the property was substantially reduced by the events. In the previous case from Beaver County, the event was a suicide only and no evidence of its impact on the market value was presented.

While it is difficult to find a bright line rule from these two cases, it would seem to be that until or unless the Superior Court’s decision is overruled, disclosure of a notorious event is the safer practice. If a buyer can demonstrate that the market value has significantly impacted by the event, under the ruling in Milliken, the matter may be presented to a jury and damages may be awarded.

The Superior Court’s decision has been appealed, with a request that the case be reconsidered by the court. The PAR Legal Action Fund has approved PAR support for the appeal and will continue to monitor the case moving forward. Regardless of the ruling, the matter may be destined for Pennsylvania’s Supreme Court.

Mr. Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees and representing and defending real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. He routinely counsels employers on employee relations issues as one of the voices of the PAR Legal Hotline. He may be reached at realcompliance.com.

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