Featured News 2016 Buying & Selling ‘Stigmatized’ Property

Buying & Selling ‘Stigmatized’ Property

In the world of real estate, there is a term called "stigmatized property." True to what it infers, stigmatized property refers to a home where there has been a murder, suicide, victims were kidnapped and held hostage, cult activity (e.g. witchcraft), AIDS, drug manufacturing, etc.

The general rule is that buyers should be aware of defects on the property and anything else that could affect the property's value. While this rule applies to physical defects, it does not necessarily mean that sellers are obligated to tell buyers if a home is stigmatized. But the legal requirements come down to state law.

Sellers' Duty to Be Truthful

While not all states require sellers to disclose hauntings, murders, suicides and criminal activities that occurred on a property, sellers do have a duty and obligation to reply honestly if a buyer asks them about a home.

A seller cannot lie, or intentionally withhold information if they think it will dissuade a buyer from purchasing their property. For example, if the buyer heard rumors that a murder occurred on the property and they ask the seller if the rumors are true, the seller can't lie about it. If the seller doesn't answer the questions, or if they try to misrepresent the facts, that could be construed as misleading the buyer.

Sellers are generally supposed to disclose an important fact that's affected the price of the property when the fact would not have occurred to the buyer. For example, in some states sellers are required to inform buyers if a house is haunted.

In some states, the following stigmas must be disclosed:

  • Hauntings and other unexplained events
  • Murders and suicides (there is often a time limit)
  • Other criminal activities, such as drug dealing

Are agents required to disclose the history of a property? It depends on the laws in your state. If you bought property and discovered that it was stigmatized, you want to consult a real estate attorney and learn which legal remedies are available.

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