We last considered the issue of realtors sneaking murder houses by trusting purchasers nearly two years ago, when Jon Benet Ramsey’s home and place of death came up for sale. We had a knock down, drag out argument about it too. My position: while it might be legal for a seller not to disclose that a home was the site of a murder or worse (and in most places it is), and while many regard sensitivity on such matters mere superstition not worthy of serious respect, the seller and the realtor have an ethical obligation to inform potential buyers when the property for sale is a murder scene As I wrote in the conclusion to the post about the Ramsey home:
“The truth is still this: there is something about the $2,300,000 house that makes it undesirable to a lot of prospects, and that means that even if the law doesn’t require the seller to tell interested house-hunters the story of the little dead girl in the basement, fairness and the Golden Rule do.”
This applies to the case at hand, where Pennsylvania’s Superior Court recently ruled that a murder-suicide occurring in a home is not a “material defect” that requires disclosure in that home’s sale. While a murder-suicide occurring in a house might be “psychological damage” to the property or its reputation, the court said, realtors don’t have to disclose it.
A man in West Chester, Pennsylvania killed his wife and then himself in their home, which was later purchased for a bargain price—it was a murder house, you see— at a real estate auction. Then the family and their realtor, Re/Max, listed the house for sale at a much higher price after confirming with both the Pennsylvania Real Estate Commission and the Pennsylvania Association of Realtors that they were not legally obligated to disclose the murder-suicide to prospective buyers. They successfully sold the house to a man unaware of the home’s violent history who later sued when he found that his house was a potential setting for an episode of “Paranormal Investigation” on cable.
To me, the unethical conduct here is obvious and undeniable. Why did the seller and the real estate agent inquire whether they had to disclose the violent history of the home? Obviously they knew it would make a difference to the seller. If they knew that, then they knew the ethical conduct would be to tell him about it. This version of the death house ethics scenario is especially clear: a buyer gets a bargain on a house because of its history, then sells it to someone at a higher price by not disclosing the feature that made it less attractive to other buyers when it was first for sale, and that buyer will now have to sell the house at a discounted price to anyone who knows what he never found out. Or perhaps he can “pass the trash,” and sell the murder house to another innocent purchaser, keeping a chain of bad ethical going until someone breaks it either by the imposition of good research or good ethics.
In its article about the ruling, Constitutional Daily has a concise summary of the laws about this problem in other jurisdictions. I’m not concerned about the laws. I understand why a property’s history is a potential litigation magnet if there aren’t limitations on what a seller has to disclose. If a murder or suicide is a material defect, what about a death from natural causes? How about many deaths? The death of a child? A fatal fire or accident? Criminal activity? There are horror movies and thrillers based on houses with all of these and more, with increasing numbers of silly TV reality shows reinforcing our primal fears and superstitions about haunted homes and evil energies left behind at the scenes of tragedies. Rather than draw arbitrary lines, the courts and law have generally chosen to say, “If this stuff matters to you, then research it yourself or ask about it directly.” That’s reasonable. In a follow-up post after our donnybrook about the issue, I wrote that the laws should require disclosure. I now think I was wrong about that. The law is right to stay out of the haunted house business.
A seller not disclosing is still unethical, however. The seller and his realtor in Pennsylvania knew that the information would make the house less desirable to a substantial number of people, so the Golden Rule directive was plain: they would have wanted to know, were they in the potential buyer’s position. The seller knew this for certain, since he did know, and because he knew, was able to get the property for a lower price. Yet he withheld the information anyway, so he could get a higher sales price. If that isn’t unethical, I don’t know what else to call it.
Other than “legal,” that is.
Pointer: Legal Blog Watch
Facts: Constitutional Daily