1. HOME HISTORY: REALTY PROFESSIONALS AND STIGMA DISCLOSURE Professional Liability Defense Federation 2013 Annual Meeting and Presentation October 9-10, 2013 Jay Barry Harris, Esquire Fineman Krekstein & Harris

2. CAVEAT EMPTER Obligation of inquiry Recession not permitted Exceptions ◦ Material defects affecting the value of the property ◦ Varies by jurisdiction

3. PSYCHOLOGICAL DAMAGE Death, violent crime on the property Stigma attaches to property and devalues it, but not a material defect

4. STIGMATIZED PROPERTY – THREE APPROACHES No duty to disclose - Pennsylvania Duty to disclose - California No duty to disclose absent inquiry from the buyer - Ohio

5. NO DUTY TO DISCLOSE PA Real Estate Disclosure Law – details what must be disclosed Suicide, homicide, violent crime – not on the list

6. SIMPLE ANALYSIS Not listed in the statute; no duty to disclose Allegations of fraud are irrelevant Seller’s and agent’s knowledge is irrelevant If a contractor cannot cure it, simply not relevant

7. DIFFICULT ANALYSIS Passage of time, damage recedes, unlike structural damage Psychological impact varies by individual Slippery slope ◦ Types of crime ◦ Location of crime

8. DIFFICULT ANALYSIS Intangible – speculative expert opinions Duration – passage of time mitigates damage Internet – keeping bad news “alive”

9. RESULT Buyer has burden to investigate Discourage investors

10. DUTY TO DISCLOSE Stigma = material defect Failure to disclose = fraud

11. SUBJECTIVE STANDARD IMPOSED UPON SELLER Facts materially altering value or desirability of property Accessible only to seller Unknown to buyer

12. NO DUTY TO DISCLOSE ABSENT BUYER INQUIRY Seller, no duty to disclose unless an exception exists Latent defect coupled with misrepresentation and concealment Trend towards full disclosure of stigmatized property

13. MISREPRESENTATION OR NON DISCLOSURE Material – aware it is important to buyer Must respond by inquiry with full disclosure

14. IMPACT OF HIV HIV positive person occupied house Statutory requirement to disclose, even in “no duty to disclose states”

15. CONCLUSION Three approaches Trend towards full disclosure Realtor may now have obligation to make buyer aware