{"id":1403,"date":"2021-05-12T11:00:24","date_gmt":"2021-05-12T15:00:24","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1403"},"modified":"2024-04-25T23:20:01","modified_gmt":"2024-04-26T03:20:01","slug":"very-superstitious-selling-the-stigmatized-property","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/very-superstitious-selling-the-stigmatized-property\/","title":{"rendered":"Very Superstitious? Selling the \u201cStigmatized\u201d Property"},"content":{"rendered":"\n
\"Image<\/figure><\/div>\n\n\n\n

Stigmatized<\/em> is an odd word to describe a perfectly\ngood piece of property with a notable incident in its history. Indeed, stigmatized<\/em>\nsounds like a pretty good deal, if you can buy a house at, say, a 10% discount\nbecause something happened in it. <\/p>\n\n\n\n

Perhaps the house was featured in a film and of abiding\ninterest to gawkers. Perhaps someone died there. Or a crime took place. The\nreal or supposed negative psychological effects of these incidents on potential\nbuyers can translate into a significant ding on the property value. If you\u2019re a\nseller, though, you\u2019re not going to be too enthused about offering that\npossible 10% discount.<\/p>\n\n\n\n

So, what do sellers, buyers, and agents need to know about approaching\nsuch transactions? Must the seller disclose the past incident to the buyer?\nLet\u2019s look at some scenarios, the industry\u2019s view, and the law.<\/p>\n\n\n\n\n\n\n\n

What\u2019s Haunting the House?\u00a0 <\/h2>\n\n\n\n

Typically, the strongest concerns arise where events such as a violent death or crime happened at or near the property. Now and then, such a house comes up on the market, and does just fine. Al Capone\u2019s childhood home<\/a>, with its outdoor terrace space, was recently marketed as the perfect work-from-home buy. But there are certain crimes that no buyer will want to hear about \u2014 understandably. Maybe the incidents were recent, and buyers are wary of the address being somehow still caught up in legal or reputational trouble. Maybe there\u2019s some physical evidence of violence (such as bullet holes) remaining. Or maybe just the idea of what went on in the house could diminish the psychological comfort of homeownership. <\/p>\n\n\n\n

Sellers may reduce a lingering stigma by renovating the home,\nby seeking a change of the property\u2019s address, or even by funding victim\nsupport groups. But some tainted homes are completely unmarketable, and end up\nin demolition.<\/p>\n\n\n\n

Pro tip for buyers:<\/em><\/strong> The troubled backgrounds\nof former owners add up to one reason title searches<\/a> before\nclosing are so meaningful. Debts, liens, and court judgments show up in these\nsearches. These can indicate, for example, that collection services could hound\nthe address, or that back taxes are due.<\/p>\n\n\n\n

The Industry\u2019s View of Stigmatized Real Estate   <\/h2>\n\n\n\n

Real estate people must follow state law and the rules of\ntheir professional associations. Additionally, these agents, appraisers, and\nfinanciers learn about stigma in their professional education and in their\nworking experience. They study the principles of property valuation as it\u2019s\napplied to various situations. If you sell a home anywhere around a stigmatized\nhome, your agent will want to ensure that the lower valuation of that property\nis not among the home prices used in your home\u2019s appraised value.<\/p>\n\n\n\n

In some cases, a past incident is properly treated as a non-material\nissue, with no need to disclose. At the same time, the seller\u2019s agent should\ndisplay situational awareness. No buyer likes to think they were misled into\npaying more than they would have offered, had they known. And no seller likes a\nbuyer to back out at the eleventh hour, after learning of a stigma from someone\nelse. Even a buyer who\u2019s unruffled by the home\u2019s history could have fair and\nreasonable concerns about the value of the home to some future buyer. <\/p>\n\n\n\n

An experienced seller\u2019s agent might talk with the seller\nabout making a \u201cstigmatized\u201d home sale work with various ideas, depending on the\nsituation. If local chatter about the past incident is the biggest problem, for\nexample, then perhaps a special house tour and coffee for the neighbors would\nbe beneficial. It could air out the situation, helping neighbors process the\npast and welcome the new.<\/p>\n\n\n\n

Disclosure of Non-Material Facts Not Required\u2014Exceptions May Apply<\/h2>\n\n\n\n

Most states do not require a seller to disclose a murder, suicide, or other notorious incident that may have happened in or around the house. Consider Delaware, which doesn\u2019t require stigma to be disclosed, because psychological impact is \u201cnot a material fact that must be disclosed in a real property transaction<\/a>.\u201d Yet Delaware law also says sellers have a duty to reply truthfully if a potential buyer asks. <\/p>\n\n\n\n

Pro tip for buyers:<\/em><\/strong> Some stigma is so murky\n(think: haunting, paranormal activity) that no state requires its disclosure.\nIf you have questions, you or your agent will need to affirmatively ask the\nseller.<\/p>\n\n\n\n

Pro tip for sellers:<\/em><\/strong> Your agent has the\nresponsibility to represent your best interest. That is, your agent has a fiduciary\nduty<\/em> to you. The laws of most states direct reasonable disclosure of factors\nthat bear on a home\u2019s value. But as for non-material facts, your agent will\nfollow state law, and avoid proactively disclosing stigma in a state that\ndoesn\u2019t require it \u2014 unless the buyer asks.<\/p>\n\n\n\n

\u261b<\/em><\/strong> <\/em><\/strong>Read\nmore here about the difference between agents and brokers<\/a><\/em><\/strong>, and the special\nduties of agents to represent your best interest in a real estate deal.<\/em><\/strong><\/p>\n\n\n\n

Some States Require More Than Others<\/h2>\n\n\n\n

State law is the seller\u2019s starting point; it must be\nfollowed. Many sellers will be relieved to know that their state does not expect\ndisclosure of deaths or other potentially upsetting incidents. <\/p>\n\n\n\n

Some states, such as Idaho, do not require the disclosure of nearby sex offenders<\/a>. Nevada takes a similar stance, stating:\u00a0\u201cIn any sale, lease or rental of real property, the fact that a sex offender\u2026resides or is expected to reside in the community is not material to the transaction, and the seller, lessor or landlord or any agent of the seller, lessor or landlord does not have a duty to disclose such a fact…\u201d (See\u00a0NRS\u200240.770<\/a>: \u201cLimitation on liability of seller, seller\u2019s agent and buyer\u2019s agent for failure to disclose certain facts concerning property.\u201d) Parents who are seeking a home in nondisclosure states can, however, find sexual crime maps online.<\/p>\n\n\n\n

Most states require no disclosure of past crimes, except\nthose involving meth labs, which can pose lingering dangers. In similar\nfashion, some states require a death to be disclosed only if caused by a hazard\nin the home. Was the death cause by toxic mold or a gas leak? If so,\ndisclosure is required. <\/p>\n\n\n\n

Deaths in a home for sale must be disclosed in some states, even if they have nothing to do with the property\u2019s physical condition. California offers perhaps the strictest example. A death in a California home as long as three years ago presumably must be disclosed (given that state law<\/a> says deaths more than three years ago need not<\/em> be disclosed). <\/p>\n\n\n\n

Maine goes the other way. Factors with psychological impact may not be disclosed without the seller\u2019s express permission\u2014in writing. Massachusetts rules out disclosure<\/a> of crime, suicide, or any \u201csupernatural phenomenon.\u201d <\/p>\n\n\n\n

Seems a cottage industry of amateur disclosure<\/a> has emerged to fill the void, even in Maine and Massachusetts.<\/p>\n\n\n\n

Because Each Home\u2019s Past Is Unique\u2026 <\/h2>\n\n\n\n

Disclosure is complicated. For just a few examples:<\/p>\n\n\n\n