If you bought a home and found out later that it had been the site of a murder/suicide, you might be more than a bit peeved that the sellers didn’t mention that fact before closing the deal. But would the seller’s lack of candor actually amount to a violation of state law requiring the disclosure of “material defects” in a property?
Last week, a Pennsylvania court was called on to answer that question.
The unfortunate buyer in the case is Janet Milliken. In August 2007, Milliken completed the purchase of a home in West Chester from Kathleen and Joseph Jacono. The Jaconos’ real estate agents were from RE/MAX.
Milliken paid $610,000 for the house. She thought that she might be getting a pretty fair deal having learned that the Jaconos had recently acquired the property at a real estate auction and were probably just looking to turn a quick profit.
Before closing, Milliken reviewed the title report and noted that the Jaconos had acquired the property from the estates of Kostantinos and Georgia Koumboulis. Milliken claimed that the names meant nothing to her at the time and the circumstances tended to confirm her belief that the Jaconos had simply plucked a plum out of foreclosure.
However, the names probably should have rung a bell. Three weeks after moving into her new home, Milliken learned that the property had been the site of a murder/suicide. On Feb. 12, 2006, police found the bodies of Kostantinos and Georgia Koumboulis in the home. The husband and wife had been shot to death. Police later concluded that Kostantinos had murdered Georgia before turning the gun on himself.
Milliken rightly thought that the Jaconos should have told her about the tragic events in the home before selling it.
Apparently, the Jaconos also wondered about whether they had a duty to disclose the murder/suicide. The Jaconos allegedly approached their RE/MAX agents about their legal obligations in this regard. The RE/MAX agents allegedly called the Pennsylvania Association of Realtors Legal Hotline and were told that the murder/suicide was not a material defect which required disclosure. The agents also allegedly did their own research which confirmed this conclusion.
So when the Jaconos filled out their seller property disclosure statement on June 17, 2007, they did not disclose to Milliken what had happened to the prior owners.
After finding out about her home’s bloody past, Milliken sued the Jaconos and their RE/MAX agents in state court for fraud and negligent misrepresentation, alleging specifically that the defendants had violated the Pennsylvania Real Estate Disclosure Law. Milliken claimed that the murder/suicide reduced the value of her property up to 15 percent.
The trial court granted the defendants summary judgment, deciding that the murder/suicide which occurred in the home did not constitute a “material defect” under the state real estate law or for purposes of Milliken’s common law fraud and misrepresentation claims.
But last week the Pennsylvania Superior Court overturned that judgment, concluding that a jury should decide whether the murder/suicide was a material defect with respect to Milliken’s home.
With regard to Milliken’s statutory claim, the court observed that the disclosure statement utilized by the Jaconos case provides that, while “the [state real estate disclosure] Law requires certain disclosures, this disclosure statement covers common topics beyond the basic requirements of the Law in an effort to assist sellers in complying with disclosure requirements and to assist buyers in evaluating the property being considered.”
The court noted, too, that the statement required the sellers to disclose any material defects “not disclosed elsewhere on this form.”
“When we view this statement in conjunction with the provision of [state law] permitting additional disclosure, we conclude that if a jury in fact determined that the murder/suicide was a material defect, then pursuant to the disclosure statement used in this case, Sellers and Agents were required to disclose the murder/suicide to Buyer,” the court said. (Milliken v. Jacono)
The court followed similar reasoning in concluding that Milliken’s fraud and misrepresentation claims could go forward.
“Here, Buyer has alleged that had she known of the murder/suicide, she would not have purchased the property. Based on the foregoing, we conclude that whether Sellers and Agents failed to disclose a material fact was a question for the jury,” the court said.
In opening the door for potential liability against the Jaconos and their real estate agents, the court further suggested that the defendants had simply failed to do the right thing when they kept their lips sealed about the fate of Kostantinos and Georgia Koumboulis.
“[T]he Sellers and Agents made multiple inquiries to determine whether they were required to disclose the murder/suicide to Buyer. Instead of expending this effort, they would have been better served by simply acting in good faith and disclosing this fact,” the court said.
– Pat Murphy