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?
Part I of this video and article series covers when to disclose a prior occupant’s affliction or death.
For Part II of the series, click here.
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 if:
- 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 is 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 seller’s agent employed by a seller who locates a buyer for the seller’s real estate. Prior to making an offer, the seller’s 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 seller’s agent knew of the prior occupant’s death on the property resulting from AIDS. The buyer claims the seller’s agent breached their agency duties by failing to voluntarily disclose the death to the buyer.
Did the seller’s 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 seller’s 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 [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 seller’s agent needs to disclose their knowledge of any deaths on the real estate. [CC §1710.2(d)]
Consider a buyer who asks the seller’s agent if any deaths have ever occurred on the property.
No matter when the death occurred, on direct inquiry, the seller’s agent must 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 seller’s agent’s general duty owed to the buyer to truthfully respond when the seller’s agent represents the seller exclusively; or
- a breach of the buyer’s 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 buyer’s 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 if 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.