A Haunting? The Specter of Seller Disclosures in Certain Massachusetts Real Estate Transactions.
As the summer months slowly fade their way into fall, Massachusetts begins its annual, pumpkin-spiced embrace of Halloween. “Spookiness” abounds, perhaps due to the centuries-old cemeteries found in most cities and towns - or the fact that one of those cities, Salem, once hosted actual witch trials and now hosts endless throngs of Halloween tourists each October.
But what happens when a stereotypical Massachusetts haunted house – perhaps a large old Victorian with creaky boards and cobwebs, easily pictured on a dark and stormy night – comes up for sale? And what if the seller thinks that the house might actually be haunted? Does the prospective buyer need to know about the skeletons in the closet before the deal closes?
Unlike some states, Massachusetts takes a “buyer beware” approach to residential real estate transactions, with certain exceptions such as a requirement for sellers to disclose whether the property contains lead paint. Nei v. Burley. Unless the seller has a legal or fiduciary duty to the buyer, courts have explained that “bare nondisclosure” of a non-apparent property defect (such as a termite infestation) generally neither triggers liability for fraud or misrepresentation nor forms the basis for a buyer to get out of the deal. Sullivan v. Five Acres Realty Trust.
Liability can emerge, however, where a seller knowingly makes an untrue statement regarding something like the features or permissible uses of a property that are “susceptible of actual knowledge” – and “not of expectation, estimate, opinion, or judgment.” Zimmerman v. Kent. Additionally, if a seller – whether upon a buyer’s question or otherwise – makes a representation of fact concerning the property without telling the whole, potentially unflattering, truth, “half-truths can become full lies” and thereby actionable misrepresentation. Kannavos v. Annino. Similarly, a realtor can face liability for conveying a false statement about a property to a buyer if the realtor fails to take reasonable steps to confirm that statement’s accuracy. DeWolfe v. Hingham Centre, Ltd.
For the purposes of our hypothetical haunted house, Massachusetts has a statute (General Laws c. 93, § 114) that protects realtors, sellers, and landlords from liability for failure to disclose that a property is “psychologically impacted” – a term defined to include, among other things, “that the real property has been the site of an alleged parapsychological or supernatural phenomenon” or “that that the real property was the site of a felony, suicide or homicide.”
While the statute explicitly does not “authorize a seller, lessor or real estate broker or salesman to make a misrepresentation of fact or false statement,” both parts of this carveout require the existence of a fact – as do the corresponding causes of action against sellers (Zimmerman v. Kent, Kannavos v. Annino) or brokers (DeWolfe v. Hingham Centre, Ltd.). Records can prove whether a murder took place at a property – but science has yet to develop a legally acceptable test to confirm either the existence or presence of the paranormal as a matter of fact. “Creepiness” or hairs rising on the back of one’s neck do not suffice. Although an October 2022 survey found that 25% of respondents believe they’ve lived in a haunted house (and another 10% said they weren’t sure), General Laws c. 93, § 114 formalizes the principle that sellers cannot reasonably be liable for failing to disclose things – like a resident apparition – that cannot be proven and likely would fall into the non-actionable categories of opinion or belief… even if the topic emerges suddenly from the darkness during the transaction.
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