When is death a pertinent fact that needs to be disclosed to a potential buyer? When is it inconsequential and no requirement exists to voluntarily bring it up?
This video covers when to disclose a prior occupant’s death.
When (and when not) to disclose
Occasionally, a homebuyer will be concerned about whether a death has occurred on the property. To these homebuyers, a death on the property is a material defect in the suitability of the property, regardless of when it occurred.
The manner of death makes a difference to the property’s market value for some homebuyers. Some types of death, such as a murder or suicide, carry heavier stigmas than, say, an elderly occupant who died of natural causes.
A death occurring on a property, and the manner of the death, are always material facts to be disclosed to potential homebuyers when:
- the death occurred within three years prior to the date of the homebuyer’s offer to purchase; and
- the death affects the property’s value or desirability to the homebuyer. [Calif. Civil Code §1710.2]
However, neither the seller nor the agents are required to disclose that an occupant of the property was afflicted with or died from AIDS, regardless of when the death occurred. [CC §1710.2(a)]
Thus, for a death occurring on the property more than three years before the date of the homebuyer’s offer to purchase, neither agent owes an affirmative duty to voluntarily disclose information regarding a prior occupant whose death, from any cause, occurred on the property.
Consider a sellers agent employed by a seller who locates a buyer for the seller’s real estate. Prior to making an offer, the sellers agent hands the buyer the seller’s Transfer Disclosure Statement (TDS). The TDS discloses the seller’s and agent’s knowledge about the present physical condition of the property. [See RPI Form 304]
All other mandatory property and transaction disclosures are made.
The buyer does not inquire into any deaths which might have occurred on the property. Ultimately, the buyer acquires and occupies the property.
Later, the buyer is informed a prior occupant died on the property from AIDS more than three years before the buyer submitted their purchase offer. The buyer would not have purchased the property had they known about this event.
The buyer discovers the sellers agent knew of the prior occupant’s death on the property resulting from AIDS. The buyer claims the sellers agent breached their agency duties by failing to voluntarily disclose the death to the buyer.
Did the sellers agent breach their general agency duty to the buyer by failing to disclose the death on the property occurring more than three years before the buyer submitted their offer?
No! The sellers agent has no affirmative duty to voluntarily disclose information to a potential buyer regarding a prior occupant:
- whose death, from any cause, occurred on the real estate more than three years prior to the purchase offer; or
- who was afflicted with the HIV virus or AIDS. [CC §1710.2(a)]
Editor’s note — Deaths on the property which occurred within three years of the offer are treated differently.
Disclosure on inquiry – always
Regardless of whether a death occurred within three years of the buyer submitting a purchase offer, on direct inquiry by the buyer or their agent, the sellers agent needs to disclose their knowledge of any deaths on the real estate. [CC §1710.2(d)]
Consider a buyer who asks the sellers agent whether any deaths have ever occurred on the property.
No matter when the death occurred, on direct inquiry, the sellers agent needs to disclose their knowledge of the existence of any deaths which occurred on the real estate. [CC §1710.2(d)]
An intentional misrepresentation or concealment of a known fact after a buyer makes a direct inquiry is:
- a breach of the sellers agent’s general duty owed to the buyer to truthfully respond when the sellers agent represents the seller exclusively; or
- a breach of the buyers agent’s agency duty owed the buyer since the agent is the buyer’s representative in the transaction. [CC §1710.2(d)]
Further, an inquiry by the buyer into deaths indicates a death on the premises is a fact which might affect the buyer’s use and enjoyment of the property. Thus, a death occurring on the property is a material fact.
On an inquiry into deaths by a buyer, an affirmative duty is imposed on the buyers agent to either:
- investigate the death; or
- recommend an investigation by the buyer before an offer is made, unless the offer includes a further-approval contingency on the subject of death.
An agent who discloses, on inquiry, that they do not know whether a death occurred on the real estate, is to hand the buyer a memorandum stating:
- the buyer has made an inquiry about deaths on the property;
- the agent has disclosed all their knowledge concerning the inquiry; and
- whether the agent or others will further investigate any deaths on the property.
Deaths affecting market value
An agent’s duty to disclose material facts known to them is not limited to disclosures of the property’s physical condition.
Consider a buyer who enters into a purchase agreement negotiated by an agent, acting either as the buyers agent or the sellers agent. The offer includes the seller’s TDS about the condition of the property. However, the buyer is unaware multiple gruesome murders occurred on the property more than three years before the buyer’s purchase offer.
The agent conceals their knowledge of the murders from the buyer. The agent is aware that the notoriety of the murders adversely affects the market value of the property, placing its value below the price the buyer is agreeing to pay.
The transaction closes and the buyer occupies the property. After, the buyer learns of the murders and sues the agent to collect their price-to-value money losses. The buyer claims the agent had a duty to disclose the deaths since the agent knew the property’s market value, due to the stigma surrounding the deaths, was measurably lower than the purchase price paid.
The agent claims they do not have a duty to disclose the deaths since they occurred over three years ago and were not required to be disclosed on the TDS.
Did the agent have an affirmative duty to disclose the deaths?
Yes! The deaths had an adverse effect on the property’s market value and were material facts intentionally concealed from the buyer.
Thus, both the buyers and sellers agent have an affirmative duty to disclose prior deaths when the death might affect the buyer’s valuation or desire to own the property. [Reed v. King (1983) 145 CA3d 261]
Desirability based on events within three years
Consider a buyers agent who is aware a death occurred on the real estate within three years of a buyer’s purchase offer.
The value of the property is not adversely affected by the death. Thus, the death is not a material fact about the property which needs to be disclosed.
The buyer does not ask their agent whether any deaths have occurred on the property. After closing, the buyer learns of the death and is deprived of the pleasurable use and enjoyment of the property. The buyer’s attitude about death is an idiosyncrasy which was unknown to their agent.
The buyer claims their agent breached their agency duty by failing to disclose the death since it inflicted an intangible harm on the buyer, preventing them from enjoying the real estate.
Should the buyers agent have disclosed the existence of the death?
Yes! The death occurred less than three years ago so the buyers agent was required to disclose.
Further, and as a matter of prudent practice, the buyer’s agent ought to determine when a known death might affect the buyer’s decision to purchase the property — regardless of when the death occurred.
Remember, a buyers agent has a greater agency duty of care to protect the buyer than does the sellers agent.
Thus, a buyers agent discloses any death occurring on the property within three years or otherwise, especially when they believe the death might affect the buyer’s decision to make a purchase agreement offer.
It is the buyers agent’s duty to investigate and disclose material facts about the property and the transaction. Thus, a greater burden is placed on the buyers agent to know and understand their client, known colloquially as the know-your-client rule.
Conversely, buyers have a duty of care owed to themselves. Buyers themselves have a duty to inquire and discover facts readily available to them or their agent in an effort to protect their own personal interests.
