Milliken v. Jacono, 96 A.3d 997 (Pa. Supreme Court 2014)

Posted by on Dec 29, 2014 in Uncategorized

Summary:

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, 73 Pa. Stat. Ann. § 201-2(4)(xxi).

Facts:

Konstantinos Koumboulis shot and killed his wife and himself inside his house. The murder/suicide was highly publicized in the local media and on the Internet. The Jaconos purchased the property from the Koumboulis estate at auction and subsequently listed the property for sale. They informed their listing agents, of the murder/suicide.  Thereafter, the Jaconos signed a Seller’s Property Disclosure Statement, which did not disclose the murder/suicide as a known material defect.

Highlights:

  • The Real Estate Seller Disclosure Law (68 P[a.C].S. § 7301 et seq.) (the “Law”) requires that a seller of a property must disclose to a buyer all known material defects about the property being sold that are not readily observable.
  • While the 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.
  • This Statement discloses Seller’s knowledge of the condition of the property as of the date signed by Seller and is not a substitute for any inspections or warranties that Buyer may wish to obtain. This Statement is not a warranty of any kind by Seller. The Statement does not relieve Seller of the obligation to disclose a material defect that may not be addressed on the form.
  • A Material Defect is 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.
  • Regardless of the potential impact a psychological stigma may have on the value of property, the Court is not ready to accept that such constitutes a material defect. The implications of holding that non-disclosure of psychological stigma can form the basis of a common law claim for fraud or negligent misrepresentation, or a violation of the UTPCPL, are palpable, and the varieties of traumatizing events that could occur on a property are endless.
  • It is safe to assume a majority of the population would find a murder-suicide disturbing, and a certain percentage of the population may not want to live in a house where any such event has occurred. However, this does not make the events defects in the structure itself.
  • Purely psychological stigmas are not material defects of property that sellers must disclose to buyers.