Duty to Disclose: Selling Stigmatized Property

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 What is Stigmatized Property?

A house or apartment where there has been a murder, suicide, cult activity, notable adulteries, AIDS, or other disasters and crimes is considered stigmatized property.

One example is the home where Nicole Simpson was slain, which sold for significantly less than the asking price. Houses that Christie Brinkley’s ex-husband had relationships in had to be pulled off the market.

Caveat emptor – buyer beware – is the common rule in property purchasing and selling. Also, a vendor cannot be held liable for neglecting to accomplish anything.

Sellers are not required to inform purchasers if the property is stigmatized under these conventional stigmatized property laws.

Are There Any Exceptions To Caveat Emptor?

The key exception to this regulation, however, is if the seller makes a “misrepresentation” or tells lies about a feature of the residence.

A seller must respond accurately with important information in a way that does not mislead the customer. Even evasive responses or silence might be considered a misrepresentation if an ordinary buyer is misled.

The following exception to the customary laws is that a seller must reveal relevant information influencing the price of the property when the buyer would not have considered it.

In certain places, for example, a buyer must warn a seller that a home is haunted since a reasonably sensible buyer could not be expected to consider this possibility.

On the other hand, sellers are not required to inform purchasers if past owners had AIDS or if registered sex offenders reside close by. The buyer is responsible for independently obtaining this information.

Finally, a seller should exercise caution and provide information that has a major impact on the property’s price and that the purchaser would not have been expected to inquire about.

What Types of Stigmas Must Be Disclosed?

The seller is required to make any stigmatized property disclosures that may impact the property’s value. Among these stigmas include, but are not limited to:

  • Phenomena: Ghost sightings, hauntings, and other unexplained happenings that may impact the property’s value must be revealed.
  • Suicide/Murder: Some jurisdictions require that any murders or suicides that occurred on the property be mentioned to prospective purchasers. However, many of these statutes have a time restriction. For instance, California only requires the deaths to be reported if they occurred within the past three years.
  • Other Illegal Activities: Many states require that criminal activities, such as narcotic selling or prostitution, be mentioned.
  • Debt: Some jurisdictions require that existing debt from the last owner be reported so that purchasers may be informed of unwanted visits and calls from creditors.

The Stigma of Public Criminal Action

Whether the house was renowned for drug selling, prostitution, or another unlawful activity; the chances are that the criminal behavior influenced the public image of the house.

Consequently, criminally stigmatized homes could be a fantastic bargain, but it also has some significant drawbacks.

Aside from neighbors’ opinion, individuals may continue to visit the residence to engage in stated illicit acts, unaware that the property has changed hands. One of the things that might raise the cost of your house insurance is living in a high-crime area like this.

Should My Agent Disclose The History of My Property?

Full disclosure requirements for agents and brokers will be determined on a state-by-state basis.

If you live in California, for instance, you and your real estate agent must mention any suicides or murders. However, no such responsibility exists in Tennessee.

In a state where the stigmatized property is not required to be revealed, a seller’s agent may be held accountable for a breach of fiduciary duty if the agency exposes the information without your agreement.

Purchasing Stigmatized Real Estate

While a real estate agent will generally not immediately provide information about a stigma, you may inquire directly whether a home is a stigmatized property.

Most agents will respond truthfully to prevent a lawsuit.

The major items to consider are:

  1. How much will the stigma affect you?
  2. Will the stigma make it more difficult for you to sell the property when the time comes?

Some stigmas, such as death and financial stigmas, disappear with time, but others, such as sex offenders or paranormal activity, may still be a problem when you’re ready to sell your home.

Because of the stigma, you could obtain a better price from the last owners.

The disadvantage of purchasing a stigmatized property is that you may have to cope with the stigma’s consequences. For example, debt collectors or those looking for illicit narcotics may visit your house for a short time. You may also have a more difficult time selling the residence.

What if you already own a tarnished home and want to start over? For starters, it helps to be frank with your real estate agent about the stigma. They may assist you in positioning the home to sell despite this possible obstacle. Then, do all you can to entice a possible buyer.

For example, if you have persistent debt collectors, try providing them with your new address instead of the property you wish to sell as a contact.

The disadvantage of purchasing a stigmatized property is that you may have to sell for less than market value due to the stigma.

How Do I Find Out If a Property Is Stigmatized?

A stigma surrounding sex offenders may saturate a neighborhood, meaning that the sex offender does not have to be the prior owner to stigmatize the residence.

Living in the same neighborhood as a sex offender may be enough to generate a stigma. To see whether there are any sex offenders residing nearby, enter the street address of your possible house into the National Sex Offender Registry database.

While this article provides an overview of prevalent categories of stigmatized property, additional stigmas may impact a home’s resale market.

Before you purchase any house, think about asking the last owner and the realtor about its past. A fast online search might also help throw up any possible red flags.

Disclosures by the State for a Stigmatized Property

Real estate agents are not required to inform you about a property’s stigma.

This is primarily because disclosure regulations are not uniform throughout the nation. While certain federal rules apply, such as the disclosure of lead paint, every state has its own disclosure requirements.

When examining stigmatized property laws by jurisdiction, the following stand out:

  • California: Unlike other jurisdictions, California requires a prospective buyer to be informed about any deaths that happened within the past three years, even natural deaths.
  • Illinois: Real estate agents in Illinois are legally obligated to report whether a property was used to manufacture methamphetamine.
  • Alaska: In addition to declaring any suicides or murders on the land in the past 3 years, Alaska laws also demand the revelation of human burial places.

What Should I Do If I Bought Property and Discover It Is Stigmatized?

It would be best to speak with an attorney in your area if you bought a property and discovered it is stigmatized. You may be entitled to compensation for any required repairs if you file a lawsuit against the seller.

A real estate lawyer on LegalMatch can advise you on your legal options and represent your interests in court.

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