BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
SCENARIO NO. 1: I am a listing agent. The seller advised me that 11 years ago her son committed suicide in the garage. She inquired as to whether she should disclose that death. She read on the internet that deaths occurring more than three years before do not need to be disclosed.
RESPONSE: It is recommended that no matter when a death occurred it should be disclosed to a new buyer. Many buyers consider a death on the property, even if it occurred long ago, to be material to their purchase of the property.
SCENARIO NO. 2: I am listing property and the seller disclosed that a relative died at the property two years ago of an AIDS-related disease. How should that be disclosed?
RESPONSE: The seller needs to disclose that a death took place at the property. Do not disclose the cause of the death unless specifically asked. If you are asked how the deceased passed, you must be truthful.
SCENARIO NO. 3: I am a listing agent and held a home open. A neighbor visited the home and asked me if I was aware that a prior owner had been killed at the home during the perpetration of a crime. How do I handle this information? I do not even know if the information is accurate.
RESPONSE: Ask the seller if the seller has any awareness of the neighbor’s comments. If so, the seller needs to disclose all information the seller has in that regard. Nevertheless, you should disclose on your Agent Visual Inspection Disclosure the following: “During an open house, a neighbor advised that a prior owner had died at the property during the perpetration of a crime. Agent has not verified the accuracy of this information. The buyer should investigate the statement to buyer’s satisfaction.”
DISCUSSION: There is a conflict in the law regarding the disclosure of a death at real property being sold. The Residential Purchase Agreement, common law, and Civil Code §2079 require parties and real estate agents, respectively, to disclose all information in their possession which affects the value or desirability of the property. For many people, the fact that someone died at the property is material and they will not purchase the property if a death occurred on the premises. Other people have concerns about the existence of ghosts or other presences. This makes the occurrence of a death at any property for sale material.
Civil Code §1710.2 states that a death on the property does not need to be disclosed if it occurred more than three years ago. However, that statute seems to be in conflict with the law cited above.
We have defended numerous real estate agents in non-disclosure cases where a death occurred more than three years before the filing of a lawsuit. The agents got sued for non-disclosure of a material fact. While we used Civil Code §1710.2 as a defense, the courts routinely held that the issue is material enough that a jury should decide the issue. If such matters proceed to trial, a real estate agent faces attorney fees, in some cases more than $250,000, defending the case and preparing it for trial.
While there is a conflict in the law, it makes practical sense to disclose if a death occurred to avoid a claim in the future.
PRACTICE TIPS:
- If a death occurred on the property you are listing, recommend that the seller disclose it. If the seller refuses to disclose it, citing Civil Code §1710.2, immediately contact your manager who can address the issue with us. It is recommended that a death occurring at the property be disclosed, no matter when the death occurred.
- If you represent a buyer and the buyer has indicated to you that it is important to them that no one previously passed away at the property, ask the listing agent in writing to confirm with the seller whether there has been a death on the property, irrespective of when it may have occurred.
- On the Seller Property Questionnaire, it asks a seller to disclose if a death occurred less than three years before. It is recommended that listing agents advise their clients to disclose a death irrespective of the time frame.
- If a seller refuses to disclose a death, refer the seller to a qualified California real estate attorney to discuss the issue. If the seller still refuses to disclose after consulting with counsel, speak with your manager and we can provide assistance.
ATTORNEY-CLIENT PRIVILEGED COMMUNICATION. Do not forward to sellers, buyers or third parties. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.