Pennsylvania home sellers must, by law, advise potential buyers of the property about “known material defects” that are not readily observable, including structural and other problems, before the sale is completed. The object is to make sure the buyers aren’t left unassisted in their efforts to understand the condition of the property, and to discourage sellers from hiding any flaws or problems.
Pennsylvania law lists the items the seller must tell the buyer about, as contained in the basic, statutory form is. The Pennsylvania Association of Realtors has put together a form entitled Seller’s Property Disclosure Statement, which lists not only the minimum statutory questions, but also includes additional ones. The seller must give one of these disclosure statements to the buyer, filled out, before they both sign the purchase agreement.
The standard form covers the home’s structure, such as the roof, basement, foundation and walls. Among other things, the form also asks the seller to let buyers know if the house has been treated for termites or has had water or sewage problems. Buyers need to be told if the house has been remodeled. Buyers also need to know whether the plumbing, electrical, heating and air conditioning systems are in good, working order.
If appliances and other equipment are included in the sale, then the seller needs to be honest about the condition of these appliances. If there are hazards or environmental contaminants on the property, the seller must disclose these as well. If there are any title, insurance, or financial issues, the seller must note these on the form.
And just in case anything got left out, the form includes a section for “Additional Material Defects,” where sellers are expected to disclose anything that didn’t otherwise fit the categories on the form.
The Pennsylvania courts have been very clear that the concept of the disclosure applies only to things that can be repaired and have a fixed cost associated with the problem. But what if the house had something bad happen in it? For instance, what if the previous owner died of natural causes in the bedroom? Or a murder/suicide or a rape occurred in the house? Is this type of psychological damage something that Pennsylvania sellers are expected to disclose to buyers?
The Pennsylvania Superior Court found (in a case called Milliken v. Jacono, 2012 PA Super 284), that sellers do not have to disclose this type of information to buyers. The house at issue had been the site of a murder/suicide, which the sellers had purchased from the deceased owners’ estate. Despite court decisions in other states holding that psychological damage did need to be disclosed, the Pennsylvania court came to the opposite conclusion. So, in Pennsylvania, the law continues to require sellers to disclose only identifiable damage.
Another example of what is not included: what the neighbors are like. Even though the presence and activities of neighbors can have a significant impact on your use of your property, the fact that the neighbors are, for example loud, prone to holding frequent parties, or are actually part of a group home for mentally challenged adults, would not be things that sellers must disclose.
Also, defects that are not “material” do not need to be disclosed, as discussed next.
Not all problems in a house are equally serious, and the seller needs to disclose only those considered “material.” A leaky sink that just needs something tightened is dramatically different than a crack in a plumbing pipe that needs to be completely replaced. A material defect is a problem that cannot be corrected with simple maintenance – something that will require significant effort to repair.
As a practical matter, however, sellers are usually best advised to disclose any defect that they’re not sure whether to call “material” or not — or to fix it before completing the disclosure form.
Some defects are hard to find, or are just not noticeable to people untrained in construction and building. This raises the question of how much the seller should be expected to know and thus disclose. Under Pennsylvania law, the answer depends on exactly how much relevant expertise the seller has. In fact, it requires that the seller disclose, on the form, his or her level of knowledge and training in the areas of engineering, architecture, and other areas related to the construction and condition of property.
So, if you are a seller who has professional expertise in a related area, you will be held to a higher standard of disclosure than a home seller who has no experience in a related field — that is, you won’t readily be able to claim that you didn’t notice a problem that anyone with your background should have noticed, even if a layperson wouldn’t have. This also benefits the nurses and graphic artists of the world, because without relevant professional expertise, they are limited to disclosing only those things that they actually know about.
In either case, however, the seller is not required to complete any investigation or analysis of the property in order to complete the disclosure form. Still, sellers should be careful about trying too hard to hide behind their lack of knowledge. The law specifically states that “the seller shall not make any representations that the seller or the agent for the seller knows or has reason to know are false, deceptive or misleading.”
For example, let’s say Tony and Carmela sell their three-bedroom, two-story house so they can move to the suburbs. Months after the sale, they find out the new owner is experiencing water problems in the basement. The couple rarely went to the basement when they lived in the house and had no knowledge that problems were, in fact, developing down there. They would not be liable to the new owner for failing to mention water problems on their disclosure form. It would be the same story if a minor leak had once developed in the slab, but they’d had this portion replaced and believed that the problem had been completely corrected. But Tony and Carmela might, arguably, be found responsible if their neighbor had once said, “Hey, did you notice you can see boxes floating around at window level in your basement” and the couple had failed to look into the matter.
If the sellers do not tell the buyers about known problems with the property, they can be found responsible for the costs of the repair as well as other actual damages the buyer may suffer. The law will not allow the buyer to claim punitive damages.