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Home sellers in Pa. don't have to disclose 'psychological defects' of house

| Sunday, Jan. 6, 2013,

Sellers looking to unload their homes have to disclose whether they had any pets there, but they don't have to say if a family was murdered there, a Pennsylvania appellate court decided.

The Pennsylvania Superior Court said sellers are under no legal obligation to disclose “psychological defects” in its ruling on an appeal from a Delaware County case filed by a woman who claimed she was defrauded when the sellers of a $610,000 house did not tell her it had been the site of a murder-suicide 14 months earlier.

Ralph Holmen, associate general counsel to the National Association of Realtors, said some states require sellers to disclose violent crimes that occurred in a property within a specific period of time, “mostly the last two or three years.”

In the Pennsylvania case, buyer Janet S. Milliken said she became aware of the house's gruesome history three weeks after moving in and never would have bought it had she known what happened there.

A panel of judges decided the psychological effect of a gory history would vary too greatly from one person to the next to be considered a material defect of the property subject to disclosure.

“There are persons for whom no amount of money would induce them to live in such a house, while others may not care at all, or even find it adventurous,” the judges wrote last month.

Pennsylvania and 43 other states have laws requiring sellers to list material defects ranging from termites to mold, radon and lead paint on a standard sellers' disclosure form.

“But the most common thing (on crime disclosure) is nothing at all,” Holmen said.

Sometimes a crime is so notorious it determines the future of a house.

That happened when a bank bought the Stanton Heights home where Richard Poplawski shot and killed three police officers in 2009. The bank sold the bullet-ridden house to Pittsburgh's Urban Redevelopment Authority, which razed it.

In some cases, a notorious past may not affect a property's value, or may enhance it, said Thomas McCue, an associate professor of finance at Duquesne University who teaches and writes on real estate.

“People buy Al Capone's house. People buy a notorious criminal's home and live in it,” McCue said.

Annie Hanna Engel, chief legal counsel for Howard Hanna Real Estate Service, said the new Superior Court ruling builds on a Beaver County judge's 2007 ruling that failure to disclose a suicide in the master bedroom of a house did not constitute a material defect.

“The best practice in issues that are not deemed within the seller's disclosure law is to have a frank discussion with the seller and encourage them to do what would be reasonable if they were the purchasers. But (disclosure) is not required and we cannot compel it,” Engel said, adding that a best practice for buyers is to advise them to check the public record.

James Goldsmith, general counsel to the Pennsylvania Association of Realtors, filed a friend of the court brief in the Milliken case arguing for the sellers.

“I've always taken the position that seller disclosure laws are intended to discover material things, things a buyer can't find out through due diligence. This is the age of the Internet and this is one of the areas you check out,” he said.

But Goldsmith said a Realtor must be truthful when asked whether a crime occurred in a house.

“If someone was to ask if there was a suicide in the house, you would have to answer honestly, whether that meant ‘Yes, there was,' or ‘I'm not at liberty to tell you,' ” Goldsmith said.

Debra Erdley is a staff writer for Trib Total Media. She can be reached at 412-320-7996 or derdley@tribweb.com.

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