The PA Real Estate Seller Disclosure Law was almost symbolic of the changes in real estate law which took place during the first year of the 21st century. The Seller Disclosure Law was emblematic as an expression of incorporating social awareness into codified law. The passage of the Seller Disclosure Law cast away the vestige of "Let the Buyer Beware" in favor of "Let the Buyer Be Made Aware." Simply put, the Seller Disclosure Law mandated that, except in limited cases (such as sale by the administrator of an estate or a trustee of a trust), the seller of residential real estate has to complete and provide to a prospective purchaser of the property a disclosure form designed to disclose any material defect in the home. Did the roof leak while the seller was the owner of the property? If so, the seller has to disclose the problem, and what, if anything, was done to correct it. Sewage back-up? Electrical problems? Same thing applies.
Of course, like most statutes, the devil has been in the details. One persistent issue which arose (and, to some extent, continues to exist) is the issue of what comprises a "material defect." What if the air around the home was subjected to an odor of burning flesh whenever a breeze from the west would bring the smell of a meat packing processing plant located two miles from the west in another township?
The issue became acute in the case of Milliken v. Jacono, et al, which was decided by the PA Supreme Court in July, 2014. In the case, a purchaser of a home brought suit against the seller, the real estate agents and broker who failed to disclose to her that the home had recently been the scene of a grisly murder-suicide. The purchaser contended that a "material defect" should be interpreted as one which a prospective purchaser would find important in making a decision regarding the home's purchase.
The Court rejected the purchaser's contention, and found that the murder-suicide was not the type of "defect" which the legislature was trying to address when it was passed the Seller Disclosure Law. Moreover, if the Court adopted the plaintiff/buyer's broad definition, it would open a floodgate of litigation. After all, any purchaser could claim at any time that something which happened on the property during the seller's tenure would be "material." What if the previous owner was a drug dealer? What if the property had been inhabited by a coach forced to leave because of a sexual molestation claim which was never proven? What if there is a rumor that the property next door belongs to a clandestine ISIL member?
The Court probably got it right: No seller or agent would ever be free from a lawsuit if the definition of "material defect" is to be based upon the sentiments and sensibilities of the Buyer. On the other hand, what if the Buyer in Milliken had been able to show that there were still some traces of blood in the kitchen or bedroom which had been covered with a carpet or paint, and that one of the victims had been afflicted with a communicable disease...?
The fact is that the "material defect" issue is still not fully resolved. Sellers need to accept the fact that, in close questions, disclosure is probably the safest route. Buyers should go beyond reviewing the Seller Property Disclosure Form, make independent inquiries of the neighbors and obtain detailed inspection reports from independent, licensed inspectors.