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Murder, mayhem and mortgages

Dear Steve,
In one of your recent articles you mentioned requirements for real estate agents to disclose information on sex offenders living in a neighborhood. Are there similar laws requiring disclosure of murders or suicides that occurred on a property?
-- Andre

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Dear Andre,
In the real estate lexicon, you're asking about a "stigmatized property." Such property, by loose definition, is the site or suspected site of a murder or suicide, criminal activity or even a resident poltergeist.

About 30 states have specific laws on the books saying that agents and sellers cannot be held liable for not disclosing such nonmaterial, or nonphysical, "defects" about a house.

Agents do have an obligation to disclose any "latent defects" to the buyer if they may materially affect the physical health or safety of individuals on the premises, but rarely would a suicide or murder on the premises meet that standard.

However, some unwitting buyers would vehemently disagree, based on the psychological impact of the event or activity that occurred in the past in their newly purchased home. And a few have even won lawsuits against sellers and agents over the issue. One involved nondisclosure of a triple murder at a house.

The examples of stigmatized properties are numerous. Take Nicole Simpson's 3,400-square-foot home, which she bought for $652,000 shortly before her murder on June 12, 1994. After sitting vacant for more than two years, the four-bedroom, three-bath condominium with a rooftop patio sold at a significantly discounted price.

Then there was the Benedict Canyon bungalow in which Sharon Tate was killed by followers of Charles Manson. It was stigmatized by the horrific crimes and it had to be torn down.

In the minority of states that lack such laws, the National Association of Realtors suggests that agents evaluate whether such information would affect a purchase, and when in doubt, disclose it to avoid any potential claim against the seller or agent or both.

Of course, such a disclosure would probably serve to depress the property's value.

In the end, the burden of discovery usually falls on the buyer, much like it does in those states where the proximity of a registered sexual offender to a for-sale home comes into question. Such due diligence usually means asking pointed questions of your agent and seller (and perhaps even neighbors) about the place and by checking criminal data bases through local law-enforcement agencies and the Internet.

If a nondisclosed murder or suicide has affected your peace of mind, you should seek legal counsel to determine your legal stance. Additionally, the NAR Web site has pages and pages of information and news stories on the subject of stigmatized properties. Go to realtor.org and do a search for "stigmatized properties."

And, as always, good luck.

 
-- Posted: Jan. 1, 2005
     

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