Problem.Planning.Residential real estate disclosure

     You are a lawyer working as a legislative aid to a state legislator who, prior to her election, was a licensed real estate broker and salesperson.   Your boss brought with her to office concerns about the potential liability of sellers of residential real property and their real estate agents for non-disclosure of facts known to have an impact on the market value of residential real property.  To illustrate her concerns she gave you a copy of an article reporting the adverse impact on the market value of residential real property caused by:  (1) deaths in the residence, especially those resulting from suicide or homicide; (2) fatal illnesses of prior occupants of the residence, especially AIDS; (3) bitter divorces of prior occupants of the property.  She also referred you to the opinion in Stambovsky v. Ackley, 572 N.Y.S.2d 672 (Sup. Ct. N.Y. 1991), in which the appellate division of the trial court held that a purchaser of a home was entitled to rescind the contract of purchase after discovering that the home had a reputation as being haunted, a reputation fostered by the seller through reports to national and local news sources but not disclosed by the seller to the purchaser prior to execution of the contract. 

     The only judicial decision in your state concerning non-disclosure is a 1928 appellate court decision relying on "caveat emptor" in holding that a farmer had no obligation to disclose to a prospective purchaser of the farm the incidence of crop disease on the farm two years prior to the purchase.  In view of uncertainty about the application and continued validity of that precedent, your boss would like you to: (1) consider and report to her on whether a legislative solution to the issues of non-disclosure described above (i.e. concerning facts that might have a psychological impact on a prospective purchaser) would be preferable to a common law solution;  (2) propose a legislative solution to the problem.  You have begun research on the problem and have come across relevant statutes from California and Oklahoma that offer some ideas:  Cal. Civ. Code 1710.2 and 59 Okl.St. 858-513.  You also ran across two local news stories.  One reported that a buyer of a home was suing the seller for not disclosing that the seller's mother had committed suicide during a two month vacation stay at her daughter's home.  The other reported that a seller of a home was suing a buyer for the buyer's failure to disclose his knowledge that the home had been used extensively in the filming of a famous movie, a fact that makes the home considerably more valuable than the price for which the seller sold the house. 

     What are your thoughts?   Draft statutory language reflecting your proposed legislative solution.