Disclosing House’s Past--Good or Bad
How much does the seller of a house have to tell the buyer about the house before the deal is sealed? Do you have a duty to disclose that the roof leaks or the air conditioner squeaks?
A seller cannot conceal known defects, explains Barry T. Mitidiere, a real estate lawyer in West Los Angeles. “If you know about a defect, you have to disclose it.”
“It is no longer ‘buyer beware,’ ” he adds. “Courts want to impose much stricter duties on sellers of property and their agents.”
Reasonable Inspection
In a recent case, a California court of appeal found that a real estate agent had to do more than disclose known defects: He had to make a reasonable inspection of the property to determine if there were any defects. For instance, water spots on the ceiling may indicate a leaky roof. Under this decision, an agent has a duty to investigate the problem and “disclose to prospective purchasers all facts materially affecting the value or desirability of the property that such an investigation would reveal.”
So far, homeowners do not have the same duty to inspect the property for possible defects, but Mitidiere predicts that the courts are leaning in that direction.
What about more esoteric aspects of your home?
If years ago there was a murder in your house and you decide to put the house up for sale, do you have a legal obligation to disclose these gruesome facts to potential buyers? What if you never mention the murder to the home buyer? Can you be sued for damages?
Two years ago, a California court of appeal faced this unusual issue. The court put the question this way: “In the sale of a house, must the seller disclose it was the site of a multiple murder?”
The court came up with what many considered a surprising answer. Yes, the court said, you do have a duty to tell the buyer about the murder.
Dorris Reed, an elderly woman, bought a house in Chico, Calif. Ten years before in that very house, a woman and her four children were murdered. After the sale, Reed learned of the “gruesome episode” from a neighbor. As the court noted, quoting Shakespeare: “Truth will come to light; murder cannot be hid long.”
Reed sued the seller and the real estate agent, claiming that the house was worth $11,000 less than what she paid for it because of its checkered past.
The Superior Court in Nevada County tossed the case out, granting a “demurrer,” a legal motion to dismiss the case because it does not state a valid legal claim for relief.
But in July, 1983, the Third District Court of Appeal published a written opinion declaring that Reed had the right to pursue her suit, that it should not have been dismissed. The court said non-disclosure of this kind could be actionable.
“The murder of innocents is highly unusual in its potential for so disturbing buyers (that) they may be unable to reside in a home where it has occurred,” the court said. “Murder is not such a common occurrence that buyers should be charged with anticipating and discovering this disquieting possibility.”
The court did not decide whether the murders had a discernable effect on the market value of the house, leaving that question to the jury, but allowed the case to proceed. Surely, the court said, a house whose claim to fame was “George Washington slept here” was worth more than the same home without such a history.
Rents the House
The case never made it to a jury. Shortly after the opinion was issued, the case was settled, according to Reed’s lawyer, Stephen E. Benson. Reed now rents the house to tenants and lives somewhere else.
The general rule about disclosure, the court reiterated, is that a seller has a duty to disclose facts affecting the value of the property “which are known or accessible only to him and also (where the seller) knows that such facts are not known to, or within the reach of the diligent attention and observation of the buyer.”
Reasonable Observation
But, Mitidiere says, defects must be extremely obvious--like a gaping hole in the ceiling--or most courts will not consider them within the reasonable observation of the buyer and will require a seller to tell the buyer about them.
If you think your house is haunted, perhaps you will soon have a duty to disclose your fears.
How far do these decisions really go? It’s not clear, but courts are moving toward imposing greater duties of disclosure on property sellers and their agents.
Attorney Jeffrey S. Klein, a member of The Times’ corporate legal staff, cannot answer mail personally but will respond in this column to questions of general interest about the law. Do not telephone. Write to Legal View, You section, The Times, Times Mirror Square, Los Angeles 90053.
