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Caveat emptor; the lack of duty to disclose a series of unfortunate events

After 15 years of practice in real estate, one thing is clear: Full Disclosure is always the better policy. I am not talking about revealing attorney-client communication. I am talking about full disclosure of property conditions and material information. In Rhode Island, a home seller must disclose known deficient conditions pursuant to the Real Estate Disclosure Act.

It’s simple. If I am selling my home in Providence and I had a roof leak, I must disclose that I had a roof leak. But, what if there were a murder or suicide in the home or on the property? Does the seller have a duty to disclose?

The simple answer is probably no. Currently, there is no requirement to disclose a fact that there was an unfortunate event in or on the property. The disclosure laws in Rhode Island focus on the structural integrity of the property, particularly for those items which are not readily or easily observable with the naked eye. The occurrence of an event which may result in a physiological stigma to one buyer, may be interpreted positively by another. There is really no reasonable way to legislate what may or may not create a phycological stigma.

In 2014, the Pennsylvania Supreme Court addressed this issue in Milliken v. Jacono, 628 Pa. 62, 64, 96 A.3d 997 (2014). The Pennsylvania Supreme Court held that “purely psychological stigmas are not material defects of property that sellers must disclose to buyers and, therefore, a failure to disclose the same to the buyer of a house does not constitute fraud, negligent misrepresentation, or a violation of the Unfair Trade Practices and Consumer Protection Law.” In Milliken v. Jacono, the buyer had purchased the home unaware a murder/suicide had occurred in the home. She discovered the issue three weeks after she moved in. In an effort to recover her damages, she sued the sellers and the real estate agents under the theory of fraud and misrepresentation for their failure to disclose the murder/suicide. In ruling against the buyer, the Court said buyer beware.

The moral of the story for the buyer is caveat emptor. The seller does not have an affirmative duty to disclose a past murder on the property. However, any buyer should conduct an internet search and investigate the myriad of crazy things that could have happened. Further, it is prudent to ask the questions. Ask about things that will impact you. The fact that a buyer does not have an affirmative duty to disclose does not mean the buyer can withhold information. In the Pennsylvania case, if the buyer had simply asked the question, the seller would have been obligated to disclose, assuming they had knowledge about the event. As a buyer, beware.

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