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Property Disclosures - tales of the Macabre

Back in September, we discussed the emerging trend that requires sellers in some states to tell buyers whether or not a particular property was ever used as a meth lab. Today, our discussion of disclosures turns on quite a different circumstance. This is an actual case decided in the Supreme Court of the great State of Alaska.

Factually folks, this one is pretty gross.

Ida Mae Johnson owned a home in Anchorage. In April, 2003 police discovered Ms. Johnson's body in the kitchen of the home. She had died of a heart attack approximately one month before her body was discovered, and during that time her body had partially decomposed. It was later learned that fluids released during decomposition caused structural damage to the kitchen subfloor. The sellers (Ms. Johnson's surviving daughters) told the buyers that their mother had died in of a heart attack in the home, without mentioning any of the other gruesome details.

The buyers moved into the house shortly after closing. Upon moving in, they investigated a "suspicious" stain under the kitchen stove and discovered blood and urine. They later removed tiles from the kitchen floor and discovered that blood and other fluids had saturated and damaged the subfloor. (.....yuck)

This being America and all, they did what most everyone would expect ---> they sued the sellers for failing to disclose the bit about a decomposing body. The case is reported here, but before you jump away from this web site, (spoiler alert) They lost.

They lost for two reasons. First, they waived their right to receive a property disclosure statement from the sellers. Second, they never asked the sellers about the circumstances of the death.

The Alaska Residential Real Property Transfer Disclosure Statement is in and of itself, a VERY comprehensive. There are 34 specifically numbers representations that must be made with three and one half pages more with 14 additional details that must be addressed. But, for all the detail required, their state law clearly allows for parties to waive those requirements.

I suppose I just do not know much of anything about Alaskan culture or customs and practices, but down here I cannot for the life of me imagine a circumstance where a buyer would want to waive the disclosure requirement.

Then again, even if the disclosure had not been waived, I cannot see any question on the form that would have required a disclosure that Ms. Johnson died and decomposed inside the house. (There are specific obligations to disclose murders, suicides, and burial grounds, but none for deaths of natural causes or decomposition.)

Did the sellers have a non-statutory or "common law" obligation to disclose? No. The old Latin Maxim "Caveat Emptor" still applies. Sellers do not have to reveal information of their own volition. But if asked or volunteered, information must be truthful and not deceptive. Sellers in this case told the truth. Mom died of a heart attack in the house. Nothing dishonest or misleading about that. But these facts do remind us why the oath witnesses in Court proceedings requires them to tell not only the truth but the whole truth.

So what does all of this mean for us here in Illinois? Well, I take away three things:

First, this case reinforces the value and importance of having a home inspection, hopefully with an attentive, experienced and inquisitive inspector.

Second, as I tell my kids every morning before school, you gotta, always, ASK GOOD QUESTIONS. Whenever a buyer learns anything out of the ordinary about a property, they really have to investigate to find out as much as they can about the irregularity (and until they do, sellers should take a page from our armed services; "don't ask, don't tell"

Finally, whenever a question presents itself, whether to disclose a defect or circumstance or not, call your lawyer.

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