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Court of Appeal of the State of California - 145 Cal. App. 3d 261
tl;dr:
The defendant sold a home to the plaintiff without telling her that a woman and her four children were murdered there. The court held that, if the defendant knew the fact affected the home’s market value, he should have informed the plaintiff.Video Summary
Case Summary
In Reed v. King (1983), a California appeals court dealt with a case concerning a house contract in which the buyer was not aware that a family had previously been murdered. The buyer sued for contract cancellation and damages, supporting the contract. The key issue was whether the seller had to reveal the past murders, even though it wasn't a physical or legal problem with the house.
The court decided that the seller should have disclosed the murders because they significantly impacted the house's value and appeal. The "buyer beware" principle did not apply in this case, and the seller's failure to disclose was considered fraud.
The case is important because it highlights an exception to the "buyer beware" rule when psychological issues impact the sale of property. It also underscores the requirement for sellers to act honestly and not hide important facts that could influence the buyer. Moreover, it shows that courts will protect buyers from sellers' deceit and let them recover damages, even if the contract is upheld.
DeepDiveHighlight a legal term to see the definition
The case involves a dispute between a buyer and the seller and real estate agents of a house where a multiple murder occurred 10 years earlier. The buyer was not informed of the incident and sued for rescission and damages. The court held that the seller had a duty to disclose the murder to the buyer, and failure to do so constituted a cause of action. The legal concept of concealment includes the failure to disclose when there is a duty to do so. The crucial issue is whether the seller had a duty to disclose the material fact of the murders, which depends on the materiality of the fact. Materiality is a question of law and depends on the right to rely or justifiable reliance. The court is discussing whether nondisclosure related to ill-repute should be disclosed and whether its nondisclosure amounts to a failure to act in good faith and fair dealing.
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