Would you buy a home considered to be haunted? What about a house where a murder occurred? Also referred to as stigmatized properties, this definition applies to residences:
- Thought to be haunted
- Where a murder, suicide, or violent crime occurred
- Infected with a contagious disease
Does such a stigma constitute a defect in the property that should be disclosed to a potential buyer? It’s tricky—here’s what our experienced real estate attorneys have to say.
Laws Regarding Stigmatized Properties
In the Commonwealth, there aren’t specific laws regarding whether sellers need to disclose the reasons why a dwelling is considered a stigmatized property.
However, other states have responded differently. Several have created specific statutes adding “stigmatized property” terminology. These jurisdictions usually recognize several forms of stigmatized property.
One is called a criminal stigma, where the house may have been used as a brothel, meth house, or crack house. Of the jurisdictions that require full disclosure, all must divulge a criminal stigma.
Some jurisdictions also require sellers to reveal if a murder or suicide occurred on the premises. For example, California state law mandates disclosure if the event occurred within the past three years. Some states even require a potentially haunted house to be disclosed to a buyer.
When disclosure is mandated, statutes vary as to whether the full facts surrounding the stigma or only specific facts should be expressed.
To complicate matters further, even if a law doesn’t require disclosure by the seller, such as in Kentucky, the code of ethics governing a realtor may require they reveal the stigma if they know about it and believe it will affect the value of the property.
When to Call a Real Estate Attorney
As a seller, you may want to decide whether a murder, suicide, violent crime, contagious disease, or yes, a ghost, has created a stigma and a potential defect on your property. It may be better to disclose it upfront rather than close the sale and have the buyer learn of the property’s details later.