Thursday, December 29, 2011

Oh no, I bought the Amityville Horror House

I have previously written about the importance of performing research before purchasing a property.  I always recommend Googling the address of the property as part of due diligence.  With a simple Google search, you may be able to find out about the crime rates in the area, crimes committed in the particular house and problems in the area that could interfere with your eventual enjoyment of the property.  I specifically wrote about a couple who bought a house that had previously been used as a methamphetamine lab.  Because the chemicals used are extremely toxic and had seeped into the structure of the home, the couple became ill simply by living in the house and had to move out.  However, they were still saddled with the mortgage on a house that they could not use and could not afford to repair.

There are disclosure requirements in Pennsylvania, but the requirements have previously been interpreted by the courts to be limited to a disclosure of material defects.  Last month, the Superior Court of Pennsylvania took a hard line stance when a seller had not disclosed to the buyer that during the previous year a murder/suicide of a husband and wife had occurred in the house.  

In the case of Milliken v. Jacono, et al., the buyer sued the sellers and the real estate agents claiming fraud and misrepresentation, because they had not disclosed that the previous owners had died via an apparent murder and suicide.  The realtors and the sellers defended themselves by arguing that they had consulted with both the Pennsylvania Real Estate Commission and the Pennsylvania Association of Realtors Legal Hot Line regarding their disclosure requirements.  The realtors and sellers believed, after researching the issue and seeking advice, that they had no duty to disclose the house’s sad history.

When the buyer moved in, she apparently learned that the sellers had purchased the home from the Estate of Kostantinos Koumboulis and the Estate of George Koumboulis.  The buyer, apparently upset that she was living in a house where a murder/suicide occurred, sued.  The trial court dismissed the matter by granting a summary judgment.  A summary judgment is a legal mechanism where, without sending the case to a jury, the trial court reviews all of the pleadings and proofs presented and decides that no genuine issue of material fact exists.  Basically, the trial court dismissed the buyer’s lawsuit, because it concluded that failing to disclose that a murder/suicide had taken place on the property was not a significant and material defect.  

The buyer appealed to the Superior Court of Pennsylvania, our appellate court, who reversed the summary judgment issue.  The Court remanded the case back to the trial court so that the issue of whether the murder/suicide was a material defect could be decided by a jury.  

One justice dissented in the case, indicating that he disagreed with his fellow Superior Court Justices in finding that revealing a previous murder/suicide was a necessary part of disclosure.  The dissenting justice, Justice Ford Elliott, noted that this case could be interpreted to demand that sellers must reveal all crimes ever occurring on a property, which would be ludicrous.  Additionally, and significantly in this case, the sellers were one owner removed from the murder/ suicide.  Judge Ford Elliott questioned whether there should be some type of a time limit with regard to this type of disclosure, specifically noting that a murder that happened 100 years ago would certainly not be significant.  The justice also seemed concerned that it was difficult, if not impossible, to put a price tag on the psychological damage to a house where a crime took place.  In other words, it is questionable whether a past crime would actually lower the value of the house.

Whether you agree or disagree with the court’s decision, it does now appear that in Pennsylvania, at least a crime as serious as a murder/suicide occurring in a house, should be reported on a disclosure in a real estate transaction.  However, as the dissenting justice noted, modern home buyers have powerful tools in the form of the internet to uncover these types of red flags with a property.  Had this buyer simply Googled the name of the previous owners, which was certainly available to her prior to closing on the house, she may have discovered the crime.  


Rebecca Stratton said...

This is very useful information. Researching the history of a prospective property wouldn’t be too hard, more than ever in this era when everyone seems to depend on Google. Doing it is better than being sorry afterwards to avoid bad investments.

Brendan Amorose said...

You are absolutely right! Doing thorough research about the home you want to buy will definitely help you avoid a bad home and also bad realtors. Aside from checking for damages inside the house, it’s also best to do a background check on the former tenants, and the neighborhood, most especially, on the home’s history. That way, you’re sure that your new home, and your new neighborhood, is the best for your family.

Ofelia Bertrand said...

It is easy to be deceived by the home’s overall appeal, especially if it is being sold at bargain price. But before buying any property, buyers should check the history of the house. You wouldn’t want to live in a house that seen a vicious crime, right? Be inquisitive and ask the realtor if there’s anything you should know about the history of the house. For example, ask why the homeowners sold the house. How long did they live there? Also, do your own research. That wouldn’t hurt. In fact, it will help you a lot.