Note: This article discusses topics that might be sensitive for certain readers.
October is, for many people, the best month of the year. For lots of Americans, the temperature breaks and the crispness of autumn sets in, and the foliage begins to turn marvelous shades of orange, red, and yellow. For some, it might even be a time to revisit old haunts as we celebrate the closing of one chapter and the beginning of the next. It’s officially time to decorate for Halloween, decide on costumes, and crack out our favorite spooky films.
Many of those movies,from the cult classic Beetlejuice to the iconic 80s comedy Ghostbusters to the children’s favorite Casper, and the standby The Amityville Horror, involve the haunting of houses. A favorite pastime for many teenagers around the country during this time of year is visiting haunted house attractions. But what happens when you find yourself sitting home alone at night, and a mysterious sound emanates from the attic, the television turns on of its own accord, and a door you swore you closed is now swung open? You’re too sensible to believe in ghosts, right?
The paranormal makes skeptics of many of us and believers of just as many, but we won’t get into that here. What is not disputed is that places hold meaning in our memories, and sometimes, the events that occur in certain places leave them indelibly marked. Most property owners spend many tranquil years in the family home, which may be passed down by will peacefully through generations. But for others, the residence may be stigmatized by an event, such as a person’s natural death or a gruesome crime, or its location, such as atop an ancient burial ground.
If it spooks you to think about moving into a home and finding out – too late! – that the last occupant met an untimely demise there, you’re not alone. Perhaps the home languished on the market, so you took advantage of a scary good deal on a gem. Your new neighbors seem friendly and welcoming, but piqued your curiosity with odd comments about the former owners.
Especially if you’re not familiar with the area, the tragedy you later learn took place in your new house would not be common knowledge, and it might not have occurred to you to make inquiries as to why the house took forever to sell, despite its great condition. Don’t just rely on the seller and/or your agent to tell you all you need to know about the property. It pays – sometimes in feeling comfortable and secure in your new home, and sometimes in actual dollars! – to do a bit of groundwork yourself.
Depending on where you live, any after-acquired knowledge might be something you’ll just have to make peace with. Caveat emptor – or “let the buyer take care,” according to Black’s Law Dictionary – is the common law maxim that it is the onus of the buyer to discover any “non material defects” of a property before purchasing. This runs counter to the principle of caveat venditor, which states that the seller takes responsibility for defects or deficiencies.
Disclosure laws vary by state, but typically require sellers of residential real property to deliver to the buyer a written disclosure of known “material defects” to the property. Seller disclosures serve to inform the buyer while also protecting the seller from future legal action for failure to disclose material defects .
But what constitutes a material defect? While the definition varies by jurisdiction, a material defect is commonly deemed to be a problem with the real estate that would have a significant adverse effect on the value of the property or that would post a risk to the people occupying the property, such as a structural issue or environmental hazard .
Yet, laws are not static, and thus subject to change, especially when it comes to determining what exactly constitutes a defect. Due to decisions of the court in the past 30 years, the protections of caveat emptor have come under scrutiny, and individual states have created ways for buyers to take action to gain knowledge of non-material facts.
A danger to the safety of the potential buyer is not the only reason for a property to cause buyers to think twice before submitting an offer. These days, a bad reputation may also present a threat to the value of a home and the financial future of a potential buyer.
Property with a non-material defect is often referred to in real estate as stigmatized property. “Stigmatized properties,” according to REALTOR magazine, “are homes where a real or rumored event occurred prior to the buyer’s occupancy that didn’t physically affect the property but could adversely impact its desirability,” and thus, its value .
Stigmas include events such as a death, homicide, or a supernatural event (i.e. a belief that the house is haunted). Or they might be circumstances that expose a future occupant to potential danger. For example, property formerly involved with drug activity might bring unwanted attention or uninvited guests to the home.
Along these lines, sellers may be required to disclose the house as a site of illegal drug production, depending on the state’s policy. Kansas does not demand a seller to disclose if the house was the site of an illegal methamphetamine laboratory, but its neighbor Missouri does . Washington, whose early adoption of a meth cleanup initiative gave other states a model for their own initiatives, stipulates that even if the property is decontaminated, sellers must still disclose to potential buyers that the property was once used as an illegal drug manufacturing site . Some types of drug activity can pose a health threat to an unknowing occupant.
In addition to psychologically stigmatizing circumstances, such as a death or murder, a property might be susceptible to a public stigma, which poses a nuisance concern for a future occupant. A public stigma attaches to a property because the property or a real or rumored event that occurred on the property is well known to the public. The public successes of former inhabitants or the fandoms drawn to the set of their favorite film or television show might create tourist attractions that become nuisances to the property owner and his neighbors. See the Cracked article from 2015 as evidence of how a public stigma affects the occupants of homes made famous by pop culture, like the homeowner who found herself with thousands of guests a day to her Goonies home in the advent of Twitter and news of a remake .
Yet other properties fall under the umbrella of “debt stigmatized,” whereby a new owner is susceptible to nuisance if the previous owner has moved on to escape his debts, leaving the new occupant to deal with unwarranted harassment.
Stigmas sometimes even combine to doom a property as unsellable – as when a highly publicized murder produces a public stigma. In some cases, however, a high-profile death may, however, be what attracts a buyer in the first place. See Curbed’s reporting on 10050 Cielo Drive, a property that, even after the demolition of the house in which the Manson Family murdered pregnant actress Sharon Tate and four others, remains stigmatized, but managed to attract the likes of Nine Inch Nails frontman Trent Reznor .
No, psychological impacts aren’t hits to the head, exactly. A psychologically impacted property involves a reputational, or other non-physical defect unrelated to the condition of the property, that may cause an emotional disturbance. This is where the ghosts come into play. (For the record, state statutes do not address hauntings explicitly, as they are considered an irrational fear. Even if the buyer believes in ghosts, so-called “phenomena stigmas” are still not considered material in the eyes of the law, as they do not present physical harm ).
Psychological impact statutes walk a thin line between protecting the seller and pleasing the buyer by offering procedures for uncovering a property’s hidden defects. In most states, common defects addressed by law include events such as suicide, homicide, or other felony, and whether the owner or previous occupant contracted or died of HIV/AIDS. However, not all states have psychological impact statutes.
Many states’ laws regarding psychologically impacted property do not consider the previously mentioned circumstances material fact, or a fact that is significant or essential to the issue or matter at hand, as these previous events do not affect the safety of the next owner. Instead of harming the buyer, these fact swill only harm the seller’s chances of successfully selling the property. For example, a 2000 study by two Wright State University professors found that the psychologically impacted homes they studied took 45 percent longer to sell, and on average sold for about 3 percent less than other homes of the same value.
Louisiana’s policies are representative of what is typically covered by law in a majority of states. The statues maintain that it is not a material fact if the occupant of the property was infected with AIDS, HIV, or any other disease highly unlikely to be transmitted through the occupancy of the same place, or if the property was the site of a homicide or other felony, or a suicide. The law also prohibits causes of action against owners and their agents for failure to disclose psychological impacts (La. Stat. Ann. 37:1468). In general, the seller’s interests are well protected.
Some states, however, require disclosures that give more protection to the buyer. For example, in South Dakota, the owner must reveal whether a homicide or felony was committed at the property within the past 12 months (SDCL 43-4-44). Californians must disclose deaths upon the property in the three years prior to the purchase date (Cal. Civ. Code 1710.2). Based on these disclosures, the buyer can terminate the purchase.
A 2012 Pennsylvania case recently reaffirmed disclosure laws in that state. Disclosures in Pennsylvania relate to material defects in the construction and conditions of the property not readily observable, and do not address psychologically impacting circumstances. On appeal, the court in Milliken v. Jacono decided that the disclosure of a murder-suicide is a slippery slope to other and potentially more subjective disclosures. The court noted that the stigma of psychologically impacted property decreases with time “as the memory of the murder fades from public knowledge,” and that forcing a seller to price a property below market value would unfairly advantage the buyer when the property value increases after public memory of the murder fades .
It is possible, though, for a court to deem apparently insignificant defects as material if the buyer can convince the court that the circumstances pose a financial or physical risk to the buyer, thus adding caveats to the application of caveat emptor. One example is the case of Van Camp v. Bradford. After discovering bars on the basement windows during a walkthrough, the buyer, a single mother with a teenage daughter, was told there was a break-in 16 years earlier. Later, she found out that a teenage tenant had been assaulted in the residence four months earlier and that the crime remained unsolved. Because of these circumstances, the buyer argued that the property was unsafe for habitation. The court agreed and determined that the crime should have been disclosed as a material defect, as it presented a danger to the safety of the new residents . The court added that for caveat emptor to apply in Ohio, a property defect must be discoverable upon inspection, the purchaser must have an opportunity to examine the property, and the vendor must not engage in fraud .
In the case of Reed v. King, a homebuyer in California found that the seller did not disclose the fact that a woman and her four children were murdered in the home. The seller had even gone so far as to ask the neighbors not to disclose this fact either. The court ruled that the buyer could not have anticipated the discovery of the crime, so duty of inquiring about the possibility of murder cannot be imposed on the buyer. As the murders materially affected the market value and desirability of the home, the history of crime was labeled a material defect, and the buyer was able to rescind their purchase of the property .
In other instances, court decisions have upheld a seller’s right to privacy in line with societal changes. Take for example the disclosure of cases of HIV/AIDS in a home. The fact that a previous occupant had this condition was not defined as a psychological defect until the late 1980s when homebuyers began to shun homes with previous occupants infected with HIV/AIDS due to a lack of understanding of how the disease was transmitted. The fear was that people could catch the disease simply by occupying the same space as an infected person.
This fear lead to the case of Kleinfeld v. McNally, where buyers in New York attempted to rescind a purchase contract for fear of contracting the disease themselves . Occurrences such as this attracted the attention of Congress, and in 1988 the Fair Housing Amendments Act was amended, and HIV/AIDS was declared a “handicap” that need not be disclosed. The states were prompt to follow, and in the following years, non-disclosure laws continued to be expanded .
A recent social media post by realtor.com showed that, based on a survey conducted by Harris Interactive, 34 percent of sellers would tell potential buyers their house is haunted, while 22 percent would say nothing. 27 percent of responders said they would reveal all details, but only if asked. We won’t judge (read: we’re totally judging) the 22 percent who reported they would say nothing .
The 27 percent of responders were perhaps the least at-risk for liability. Remember when we said earlier that state laws don’t recognize hauntings? Consider the case of Stambovsky v. Ackley (referred to as the Ghostbusters ruling). Although the seller was vocal about her home’s reputation as being haunted, the court found that the buyer, who was not local, had “no reason to inquire” about the supposed haunting beforehand, and “could not have discovered its presence through a reasonable inspection.” The court subsequently supported rescission, or cancellation, of the purchase, saying the seller took unfair advantage of the buyer’s ignorance . In this case, the court came to the buyer’s rescue. To be clear, the case was not a decision about recognizing the house as haunted, but rather a decision on the buyer’s right to know about a property’s reputation and the seller’s duty to disclose in New York .
While not all states require disclosure of psychologically impactful conditions, some specify that disclosure isn’t required, but if prompted, agents must answer truthfully (see Massachusetts Gen. Laws c.93, Sec. 114 and Connecticut Gen. Stat. 20-329ee for examples). Again, it is the buyer’s burden to ask these questions. Although owners and their agents in other states may refuse by law to disclose any potentially troubling details, the buyer can often draw conclusions based on this refusal and conduct further individual research before committing to a purchase.
Although most states in the U.S. still operate under caveat emptor, laws continue to evolve, increasing buyer protections against purchasing homes that could prove harmful to their physical and financial safety. However, it is still prudent to take initiative to protect yourself through individual investigation. Have a conversation with your real estate agent. Ask questions. And if all else fails, take to the internet. A simple Google search of the home’s address can give insight into the property’s past which may not be presented upfront at the time of sale. With the proper preparation and knowledge of local non-disclosure laws, there is no reason to stay up all night with a case of the creeps.