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Real Estate Sellers' Disclosure

Generally, an individual sellling residential real estate must disclose any known,  material defects affecting the property.  A material defect is one that would have a significant adverse impact on the value of the property or poses an unreasonable risk to people on the property.  In the case of Milliken v. Jacono, the Pennsylvania Superior Court recently clarified that the duty to disclose applies to physical defects, not psychological defects.

Shortly after purchasing her house from the Jaconos, Ms. Milliken learned that a murder/suicide had occurred in the home less than two years before she purchased it.  The individuals who sold the house to her, and their real estate agent, were aware of the murder/suicide but did not disclose it to her at any point in time. During her suit against the sellers, Ms. Milliken obtained an appraisal showing that the the house was in excess of than $100,000 less valuable based upon the prior incident.

A slim majority of the court found that the existence of a murder/suicide "goes to the reputation of a property and not its actual physical structure."  They also found the calculation of the house's fair market value too subjective.  Finally, the court interpretted the legislative intent of the seller's disclosure law was specific to the physical structure or legal impairments on a property.  As such, reasoned the court, the sellers did not have to disclose the existence of a murder/suicide.

Obviously unsatisfied with the result, Ms. Milliken appealed the case to the Supreme Court of Pennsyvlania.

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