Issue: The issue in this case is whether or not Ohio should recognize a cause of action for residential

property tainted by stigmatizing events that have occurred on and near the premises.

Rule: Virtually all of the case law regarding the buyer's duties under caveat emptor focuses on physical
property defects. Thus, the case at bar is unique in that it presents issues regarding duty and liability for a so-called psychological defect in the property, namely, that the property was rendered unsafe for habitation by the plaintiff due to the serious crimes that had occurred in and near the residence. These statutes generally state that sellers of real estate are not liable for failing to disclose stigmatizing events, such as the fact that a homicide, suicide,[ 63 Ohio Misc.2d 257 ]felony or death by AIDS occurred in the residence.4 Ohio has not adopted a nondisclosure statute of this nature.

Application: Defendants' argument that the defect at issue here was readily discoverable lacks merit.
Checking police records in order to ascertain the relative safety of a neighborhood or a particular residence would not be an action undertaken by even the most prudent of purchasers. When viewed in conjunction with a potential misrepresentation or concealment on the part of defendant Bradford regarding the relative safety of the home, the latent nature of the defect at issue here renders the defense of caveat emptor inapplicable. When a fiduciary relationship exists, as between a realty agent and a client, the client is entitled to rely upon the representations of the realty agent. In the absence of a fiduciary relationship, the law requires a person to exercise proper vigilance in his dealings, so that where one is put on notice as to any doubt as to the truth of a representation, the person is under a duty to reasonably investigate before relying thereon. The prevailing trend in misrepresentation cases, however, is to place a minimal duty on the buyer to investigate and discover the true facts about the property. See Powell, supra, at 258. A seller who is under a duty to disclose facts and fails to do so will be held liable for damages directly and proximately resulting from his silence. A person injured by fraud is entitled to such damages as will fairly compensate him for the wrong suffered. (citing 25 Ohio Jurisprudence 2d [1957] 32, Fraud and Deceit, Section 201). As an additional safeguard, objective tangible harm must be demonstrated to still the concern that permitting cases of this nature to go forward will open the floodgates to rescission on subjective and idiosyncratic grounds.

Conclusion: Since the nondisclosure statutes of other states merely protect sellers from the burden of
voluntary disclosure regarding psychological defects, and since several states have specific provisions designed to uphold honesty in residential sales transactions, the duty described in this opinion is well within the range delineated and envisioned by other state legislatures. In contrast, the court finds as a matter of law that the inquiry of plaintiff was directed solely to the homeowner, defendant Bradford: she alone responded to plaintiff's question regarding the safety of the residence. The real estate defendants had no duty to affirmatively speak up and disclose their knowledge of the crimes simply because they were in the room at the time the inquiry was made. Had the real estate agents similarly misrepresented or failed to disclose a material fact upon an inquiry directed to them, summary judgment in their favor would not be warranted. Even construing the facts in the light most

favorable to the plaintiff, however, the court must nevertheless find that this factually distinguishable situation simply did not transpire in this case. Thus, since reasonable minds could come to but one conclusion regarding the evidence, and that conclusion is adverse to the plaintiff, the summary judgment motions of defendants Realty World, Campbell, Patton, and defendants West Shell and Hoff are hereby GRANTED.

Source: http://www.leagle.com/xmlResult.aspx?page=1&xmldoc=199330863OhioMisc2 d245_1259.xml&docbase=CSLWAR2-1986-2006&SizeDisp=7