Prior Murder Is Not a Material Defect
Read the full decision: Milliken v. Jacono
Pennsylvania’s highest court has considered whether a murder/suicide by a prior owner on a property constituted a material defect requiring disclosure.
In 2006, Kathleen and Joseph Jacono (“Sellers”) purchased a property through an auction from the Koumboulis estate. The former owner had allegedly shot his wife and then committed suicide on the property. The Sellers listed the property for sale in 2007 with Fran Day and Thomas O’Neil of Re/Max Town & Country (“Listing Broker”). Prior to listing the property, one of the Sellers had spoken with the Pennsylvania Real Estate Commission (“Commission”) about whether murder/suicide was a material defect requiring disclosure and the Sellers were told that these circumstances did not require disclosure. The Listing Broker had a conversation with the Pennsylvania Association of REALTORS® Legal Hotline, and was also advised that murder/suicide was not a material fact requiring disclosure.
Janet Milliken (“Buyer”) learned of the Sellers’ property through her real estate representative, John Restrepo of Fox & Roach LP (“Buyer’s Representative”). The Buyer entered a purchase agreement with the Sellers, and received the Sellers’ property condition disclosure (“PCD”) statement. The PCD did not disclose the murder/suicide as a material defect. The PCD also stated that the property was last occupied in 2006, and the Sellers had owned the property for seven months. The Buyer later testified that she was not aware of the murder/suicide until three weeks after she moved onto the property, although she had received documents prior to closing that listed the alleged murderer as the owner.
The Buyer filed a lawsuit against the Sellers, the Listing Broker, and the Buyer’s Representative, alleging fraud and misrepresentation over the failure to disclose the murder/suicide on the property. The trial and appellate court entered judgment in favor of the defendants, determining that psychological defects on the property are not material defects requiring disclosure. The Buyer appealed.
The Supreme Court of Pennsylvania affirmed the lower courts. The court found that all of the Buyer’s allegations relied upon the conclusion that the murder/suicide on the property was a material fact requiring disclosure and so if this wasn’t a material defect, then the Buyer’s lawsuit failed. Initially, the court rejected the Buyer’s argument that because the Sellers used a disclosure form (prepared by the Pennsylvania Association of REALTORS®) that went beyond the statutory requirements, they had a duty to disclose the murder/suicide. The court stated that voluntarily disclosing more than was required does not create additional disclosure obligations.
Next, the court affirmed the lower courts’ determination that psychological stigmas on a property do not constitute a material defect requiring disclosure. The Buyer argued that because psychological stigmas reduce the value of the property, they constituted material defects requiring disclosure. The court rejected that argument because it would be impossible to define when there is a psychological impact necessitating disclosure, since different people will have different perceptions as to what constitutes a psychological stigma. The court gave a number of examples of what may constitute a stigma for some but not everyone, such as death by poisoning or satanic rituals taking place on the property. The disclosure law only requires sellers to identify physical defects found on the property, and the court was unwilling to expand the scope of the law. Thus, the court affirmed the lower courts.
Milliken v. Jacono, 2014 WL 3579791 (Pa. July 21, 2014). [Note: This opinion is not published in an official reporter and therefore should not be cited as authority. Please consult counsel before relying on this opinion.]
Editor’s Note: NAR Legal Affairs would like to thank the Pennsylvania Association of REALTORS® for updating us about this case.