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Saturday, July 4, 2015

3 bedrooms, 2.5 baths, 1 ghost; What Sellers don't want you to know

by Robin M. Strom-Mackey

“A prevailing theory among law makers appears to be that stigmatized properties are only stigmatized because of buyers’ superstitious predispositions.   Because stigmatization does not affect the real value of the property, it need not be disclosed.”

You hold your breath as the woman on the screen turns and…sees the apparition with the bulging eyes and green skin.  Her clothing in tatters and her hair standing on end, she reaches, reaches for you. You shut your eyes and shudder in delight.  For many of us the thrill of a haunted house is a wonderful indulgence into the macabre.  We love to be titillated by television shows and movies about the unknown, because it’s a controlled environment.  You know when the creepy music begins someone’s going to get it, and you know when it’s over you’ll be turning off the set and heading to the safety of your own bed. But while many of us enjoy watching shows about hauntings on TV, most of us would rather not live in a haunted location ourselves.

 In fact Renters.com conducted a survey of their readers and found that 31% of renters would not live in a haunted house for any price.  Conversely, 51% of the respondents said they would live in an apartment with a ghost if the rent was free, and 27% said they would live in a haunted location for half price, and more males than females felt living with a spirit was acceptable if the perks were good enough.  Notice that most people would only put up with a spirit for a decrease in rent, and therein lies the rub for the landlord or homeowner.  What does one do if trying to sell a property with a troubled past (Wakefield Research, 2009)?

Following two landmark cases in the 1980’s and 90’s states got busy writing statutes in  knee jerk reactions, to prevent themselves being caught in the middle of messy property disputes. Prior to this time sellers and their agents didn’t consider it necessary to disclose psychological impacts working under the premise of caveat emptor or buyer beware, believing that anything about a property that needed to be known should be discoverable by a savvy buyer conducting an inspection of a property. But the premise of caveat emptor was slowly being eroded by judicial decisions which appeared to be favoring buyers who felt they had the shroud pulled over their eyes.

Reed vs. King

 California was faced with its own property conundrum in 1983 with the Reed vs. King Decision. Dorris Reed, an older, single lady unwittingly purchased a house from Robert King.  Mr. King sold her the home for $76,000 making no mention that ten years earlier a mother and her four children had been murdered there. Not only did King nor his agent tell Reed about the murders, but King further asked a neighbor not to mention the fact.  It was only after Reed had bought the property that the neighbor made the information known. 

 In the first court case King and his agent were able to stave off rescission and restitution.  But upon appeal the case was reversed.  The court decision noted that not only had King not made any disclosure, but he’d gone out his way to make sure the information didn’t reach Reed, by his clandestine agreement with the neighbor.  The court judged that while there was nothing materially wrong with the property, they did admit that the amount Reed paid was more than anyone else would have offered, because of the psychological stigma.

 California State of Appeals, Third district’s judge, J. Blease, admitted that he was concerned about his decision, fearing that any buyer who felt their property was stigmatized in the future would be filing for restitution.   According to the court’s written decision, “The paramount argument against an affirmative conclusion is it permits the camel’s nose of unrestrained irrationality admission to the tent.  If such an “irrational” consideration is permitted as a basis of rescission the stability of all conveyances will be seriously undermined (Leagle, 2014).”

 Stambovsky v. Ackley

New York State’s Appellate Division of State Supreme Court faced a similarly shadowy situation in the Stambovsky v. Ackley case.  Mr. Stambovsky, being an out-of-towner from New York City, agreed to purchase Ms. Ackley’s lovely waterfront home, a rambling historic Victorian on the shores of the Hudson River,  for a whopping $650,000.  He made good on his promise by placing a deposit of $32,000 down. Then he found out from a local architect that the house was haunted. 

 Now it shouldn’t have been hard to find out the information as it seems Ackley had been capitalizing on the home’s reputation for some time.  The home had been written about in the local newspaper and it had also become a stop on the Nyack, New York’s haunted walking tour.  And in 1977 Ackley received $3000 for telling her story to Reader’s Digest in an article entitled “Our Haunted House on the Hudson.”  Apparently she forgot to mention the ghosties to Stambovsky, however, who when he did come up to speed, sought rescission of his contract and recovery of his down payment.  Ackley of course balked at returning the money, and the whole hot mess ended up in court.

 The brief of the State Supreme Court’s decision is a pun-filled, tongue in cheek argument against the whole ghastly situation.  The court did protect the realtor and seller for fraud, stating they had no legal duty to disclose the ‘phantasmal reputation of the premises (Loweringthebar.net)’” But then they did agree that Stambovsky should be able to seek rescission because the omitted history of the property might affect the property’s overall value.  They summarized that the seller, “having both hidden and promoted the facts was, ‘offensive to the court’s sense of equity (Edmiston, 2008).’”

The Burden of Owning a Stigmatized Property

So what if you’re a prospective home buyer? Do you have any legal right to find out if a property has an unsavory past or a ghost in the attic? For example would finding out if a murder, suicide, or felony occurred at an address make a difference in whether you purchased a home?  What if someone simply passed away in the home?  And what about the sticky prospect of alleged paranormal or supernatural occurrences? Having this type of history places a property in the category of a stigmatized property.

 A stigmatized property or a property with a psychological impact is a property that may have absolutely no physical defects but has acquired, for whatever reason, a psychological or emotional stigma which therefore may reduce its value. For example, properties where a grisly murder occurred or where someone committed suicide are examples of stigmatized properties. Two Wright University professors conducted a study on stigmatized properties and found that such locations typically remained on the market 50% longer and netted a price tag 2.4% less than comparable properties.   But the 2.4% may be overly optimistic. Susan Funaro cites a California appraiser specializing in diminution value issues who speculated that a highly publicized murder lowers a property’s value 15-30% (Funaro 2010). 

 Appraiser, Randall Bell, notes that the devaluation of a property where a murder took place decreases with time, but noted that it took 10-25 years for this to occur.  All the appraisal experts agreed that the devaluation varied with the type of stigmatization.  A home where a burglary occurred may be exempt from loss of value, whereas a property where a triple homicide occurred may sit on the market for years and sell at far below fair market value.

 Of course on the opposite side of the spectrum, at times a resident spook can be good for business.  A few years ago a ghost group with whom I was working got asked to meet with the director of a civil war era fort.  The director’s idea was to raise money to refurbish the fort by capitalizing on its resident spooks.  In one month, with weekend tours to the island, she hoped to raise $100,000!  Indeed just about any older town or hamlet in the country has its share of walking ghost tours, or haunted house tours.  A resident ghost can, under the proper circumstances, be a financial gold mine.

 Stigmatized Property and State Laws

With Stambovsky vs. Ackley and Reed vs. King decisions weighing on their shoulders more than half the states quickly passed some type of stigmatized property laws.  However, the laws they enacted materially serve and protect in particular the brokers and agents selling stigmatized properties from non-disclosure of psychological stigmas.  Many states also include the sellers/owners of properties in an umbrella of protection.

 A prevailing theory among law makers appears to be that stigmatized properties are only stigmatized because of buyers’ superstitious predispositions.   Because stigmatization does not affect the real value of the property – the walls, roof and floors – a superstitious bias has no grounds in valuation. In other words, if you feel skittish about buying a property where a murder-suicide occurred, it’s your problem for having archaic superstitions in the first place, and not the responsibility of the broker or seller to disclose (Edmiston, 2011). 

 And if you find yourself locked into an agreement to purchase a property that you find has a stigma, you have no recourse in many states to get out of the deal.  Then there’s the idea that you may have overpaid for a property that has a lowered value because of the stigma, as Reed vs. King demonstrated.  And what do you do when you try to sell the property?  Personally, I find this stance exceptionally pompous. 

Apparently law makers do not realize that the vast majority of Americans (82% of the population) still profess to be Christian, and some 85-90% declare a belief in God or a higher power, according to two surveys conducted by the Baylor Institute for Studies of Religion (2005, 2008). God, Christ and the Holy Ghost, believing in something not of the flesh is in the organization’s slogan.  Therefore, I’d disagree with lawmakers that nearly all of the populace is archaically superstitious, and just need to get over it.    Edmiston does argue that while law makers take a hard stance against superstitious buyers, the courts have tended to support the buyers in certain landmark cases over the sellers who did not disclose.

 And yet lawmakers make a case too, that what happened on a property in the past should in no way hinder a current owner’s enjoyment of a property.  Case in point, we found out, from neighbors after we had purchased our house that our property had once been the site of a suicide. A terminally ill farmer jumped from the roof of his barn which had been located at the south edge of our yard.  Barn, roof and farmer were all long gone by the time the house was built. For us it became part of the local folklore versus something we worried about. When we do, as we often do, come across old tools or pieces of glass we display them on a shelf as memorabilia of times gone by. The history of the property doesn’t in any way detract from our enjoyment of the pool, for example.  It has become for us more a conversation starter than a deal breaker. 

 But then there are different levels of stigmas.  For example, finding out that Farmer Brown jumped from the roof would be different than say finding out that the property had once been the site of a multiple homicide.  And then there’s the Maryland case in which homeowners found out, after the fact, that their property was a graveyard.  (So much for enjoying the pool on that property!) 

 Hickman vs. Carven

Former Worcester County Commissioner, Louis Hickman, acquired a 200 acre farm in the 1960’s in Bishopville, which he intended to turn into 150 residential lots, known as Holiday Acres. Whether Hickman knew of the cemetery located on lot 96 when he procured the farm is unknown as Hickman passed away in 1997, before the case came to court.  Of course it is interesting to note that it appears it was the graveyard where his own ancestors had been buried.  According to court records, before selling lot 96 Hickman apparently used a bulldozer to remove the headstones of a family cemetery that included deceased members of the Hickman and Beauchamp families. 

Tom and Deborah Carvens purchased the lot in 1986 they submitted their plans for a home to Louis Hickman who approved the building plans.  Hickman never told the couple of the cemetery, and a recorded plat map No. 2 showed no cemetery. 

The Carvens worked with a general contractor and performed much of the building of the house themselves.  During construction, with the digging of a septic system or the laying of underground utility lines no suspicious bones were reportedly found.  The couple also reportedly did extensive landscaping, putting in trees and shrubs without incident.  Eventually one of Ms. Carven’s business associates informed her that her house was built on an old cemetery.  Not long after, Ms. Carvens was digging out an old yucca plant and came across some bones and a metal handle which she took to be the handle off a casket. 

Two county sheriff’s deputies found further bones in the same hole when called in to investigate. The Carvens admitted to a reporter that they were uncomfortable with the cemetery, and desired to move, but feared no one would buy the house. Instead they decided to take the case to court.  They also admitted that they feared their house was haunted. 

The case was tried under the Maryland State statute  § 5-108(a) which precludes a cause of action for personal injury or injury to real or personal property that results from the defective and unsafe condition of an improvement  or is over 20 years old (Findlaw).  The Court determined that the cemetery did not in fact cause an unsafe condition and the case had exceeded the 20 year mark. Strictly interpreting § 5-108 the way its writers’ had intended meant that the Carvens would have had to been in some physical danger from the improvements, the roads, bridges, etc., that Hickman had paid to put in place, and a strict reading of the law indicated that the Carvens were not in fact in any physical danger from such unsafe conditions on the property.

 Unhappy with this result the Carvens appealed the matter to the Maryland Court of Special Appeals which reversed the first verdict, saying in effect flattening a cemetery and then hiding the fact was not something that  § 5-108 had been written to protect against.  The Court of Appeals allowed the Carvens the ability to sue the Hickman estate. The judges further admonished the Hickman’s for having decimated a cemetery in the first place, a property that should be seen as sanctified ground (Desmon, 2000).

 State Law and Stigmatized Property

So if you’re concerned about what the stigmatized property law is in your state I’ve enclosed a state by state break down. But to summarize briefly no state yet has proposed that psychological stigmas be disclosed to interested buyers.  The majority of states agree that disclosure of psychological stigmas are not material fact and thus not necessary to disclose.  What this means in layman’s terms is this, the seller and certainly not her agent are legally responsible to tell you about a stigma (moral obligations notwithstanding).   Law makers have taken the hard tack that a stigma in no way detracts from the value of a real value of a property, the walls, roof or floors.  If you buy a home and then later find out there is a psychological stigma you cannot file a cause of action – in other words demand a deposit back or annul a contract or sue them in a court of law. 

 The laws are written to protect primarily brokers and real estate agents who arguably might get caught in the middle.  Many states cover only brokers and agents, and say nothing about protecting the seller.  A few states, like my own state of Delaware, make some concession to a potential buyer.  In these states a buyer can make written inquiry about any psychological stigmas.  In most states that allow this provision the buyer or buyer’s broker can either answer or refuse to answer, which is a type of answer as well; the refusal to answer an inquiry is a sign of guilt on the seller’s part and thus some indication that there is a stigma that has not been disclosed.  And several states with statutes that protect against disclosure do have a caveat that sellers and their agents cannot misrepresent a property, or in effect lie about a stigma.  I have listed a few of the more interesting state laws directly below, just to give you a taste.

California

California’s disclosure law could be labeled death on a deadline.  When buying in California, if a death occurred on a property within 3 years of selling the owner is responsible for disclosing the fact. After 3 years, however, all bets are off.  Recall the appraiser that noted it took 15-30 years for the value of a stigmatized property to rally. 

Illinois, Michigan, Montana, and Texas, Missouri

 While many state stigmatized property statutes protect the brokers in a transaction, five states in particular shield only the broker from non-disclosure. Nevada and Texas protect brokers from disclosing deaths by HIV/AIDS and other types of death on the property, except when the death was caused by a condition on the property.  Thus, if the roof came down and killed someone this would be an item to be disclosed. Missouri covers only real estate agents and brokers, failing to mention sellers at all.   

Delaware, Connecticut, Georgia and New York
 A few states protect brokers and sellers from disclosing psychological impacts but do make allowance for a concerned buyer to at least make an inquiry about a property’s history. Delaware for instance allows for written inquiry to be made. Should an owner receive such a written inquiry about crimes or deaths on a property they are directed by law to answer honestly.  Tellingly, Delaware law protects only agents from nondisclosure, but makes no mention as to a seller’s protection for failure to disclose stigmas.  Connecticut, Georgia and New York have similar processes, but allow for a seller to answer or refuse to answer an inquiry.  The thought behind such laws is that a seller’s refusal to answer a direct question is in itself an admittance to a psychological stigma on the property.
 Indiana, Ohio, Rhode Island and South Carolina

Several states make no provision for disclosure, but do add the caveat that sellers and agents cannot make a misrepresentation of facts.  So in other words, if you ask and they lie you should be able to get out of the agreement. Ohio law in particular suggests that if a seller misrepresents a property’s history they are materially responsible for the financial hardship such misrepresentation caused.

 Caught in the Cross Hairs: Real Estate Agents and Stigmatized Property Laws

 “The immediate response of the real estate agent was, ‘Oh, you don’t want that house….Take my word for it honey, you don’t want that house.’” This excerpt from Mark Spencer’s book A Haunted Love Story, Ghosts of the Allen House chronicle the odd behavior of an agent when he and his wife enquired about purchasing an old home.  New to the neighborhood, the couple couldn’t figure out why the agent was so reluctant to sell them a house.  They found out later, from neighbors, about the home’s ghostly reputation.

UCLA Law Review Senior Editor, Stuart C. Edmiston notes that many agents will disclose more about a property than the law requires out of a sense of fair play, as we see in this example.  While real estate agents may not be required to make disclosure on stigmatized properties, many brokers apparently feel compelled to say something anyway.  Many believe that maintaining a reputation of honesty and integrity outweighs the quick sale of an undesirable property.  Or perhaps with the courts’ decisions leaning in favor of the duped buyer, agents feel cagey, caught in the middle of an unsustainable slippery slope (Edmiston, 2011).

What Is a Buyer to Do? Meet the Neighbors apparently.

Edmiston goes on to say that if the agent says nothing, the neighbors certainly will.  He notes several cases where a nosy neighbor informed buyers of a less than desirable property history. So if you’re looking at properties take the time and walk next door. Ask a few questions about the neighborhood and the house and you may glean more information than you thought possible.  Real estate agents have also suggested that a buyer do a Google search of a property if they feel they have reason for worry.  Between the two approaches hopefully you’d find out what you needed to know before signing on the dreaded dotted line.

Below is a state-by-state breakdown of stigmatized property statutes, and a quick guide of legal terms that may help you make sense of them.

State By State Breakdown
 
 
Quick definition of Legal Terms used Below.
 
Causes of Action: Are a set of facts sufficient enough to justifiably allow a party to sue to gain money, property, or action against another party. A plaintiff (the wronged individual) can bring about a suit in court for a breach of contract, for example.
 
Caveat Emptor:  Latin for buyer beware.  Before the 1980’s it was assumed that a careful buyer could glean enough information about a property with an inspection on the premises.
 
Disclose or disclosure: The act of revealing something otherwise unknown or secret. Written information about a property that is given to a potential buyer.
 
Material Fact: In real estate transactions a material fact is a fact that if known might have made the buyer make a different decision whether to stay in an agreement or reduce the amount paid for a property.  For example if a property was on a flood plain and had a history of flooding, as a potential buyer you would expect to be told this fact. And it would probably factor into the amount you offered or whether made an offer at all, flood insurance being what it is. Most states have disclosure laws where material facts (information against the property) is required to be disclosed to a potential buyer. If disclosure does not occur then a buyer can take an agent or seller to court, or pull out of a deal altogether.
 
Rescission is the cancellation of a contract.  Such cancellations can be one-sided, as when a single party cancels a contract because of a breach of contract by the other party. Rescission can also occur when both parties mutually agree to cancel a contract and discharge any and all remaining obligations.
 
Sellers the person or persons who own the property and are selling it.
 
Sellers’ Agents Anyone with whom the seller contracts in order to complete the sale of a property, usually just the listing real estate agent.
 
Buyer’s Agent The real estate agent or broker that is working with the party that is buying the property.
 
 Arizona

Arizona is no friend to buyers of stigmatized property. Arizona amended the statute in 1996 which protected only sellers’ agents. The amended law now includes any “licensee which acts on behalf of a seller”, thus also including the buyer’s agent as well. The law prevents causes of action against agents and sellers for failure to disclose psychological stigmas against a property including failing to disclose homicide, felony, suicide or natural death on a property. HIV and AIDS or other diseases not likely communicable by occupancy. Further, the law prohibits rescission of a sale for failure to disclose. In other words, buyers cannot request a nullification or cancellation for later learning that a property has a psychological stigma attached (Brown, Thurlow, 1996)(ARIZ. REV. STAT. ANN. § 32-2156(A)(1)).

 California


Following the notorious Reed v. King Decision, California rewrote its law to include the three year rule. Reed sued for rescission and damages upon finding that a mother and her four children were murdered on the property ten years before.  California does now require disclosure of a death on a property of a former occupant, but only up to three years following the death. The law protects buyers’ and sellers’ agents and sellers from actions against disclosure beyond the three year mark.   It does make clear however, that while failure to disclose a stigma is not cause for action, sellers and agents cannot intentionally misrepresent facts regarding death(s) on a property following a direct inquiry (Cal. Civ. Code § 1710.2(a)).


Colorado



Colorado’s law argues against disclosure by indicating that information about a property is not material fact if it leads to psychological impact. It lists several of the usual suspects leading to stigmatization such as a former occupant having AIDS or HIV, homicide, felony, suicide etc. The list is not exhaustive, but suggests that other facts could lead to stigmatization and thus the law could be applied. Subsection 2 of Colorado’s law protects real estate agents from actions. Interestingly, it does not extend the same for sellers (COLO. REV. STAT. ANN. § 38-35.5-101(i)).


Connecticut

Connecticut’s law does not require disclosure of information that leads to a property’s stigmatization.  Such information not being considered material fact, agents and sellers are therefore safe against causes of action by buyers.

However, Connecticut does make provision for buyer inquiries.  A potential buyer, upon making a bona fide offer on a property may notify the seller in writing that the offer is contingent upon the property not being stigmatized. The seller or sellers and their agents must also respond in writing or may announce their refusal to disclose such information. Of course a refusal to disclose information is considered an admittance that the property is stigmatized in some way. (CONN. GEN. STAT. ANN. § 20-329cc to -329(ff)).

 Delaware

Like Connecticut law, Delaware makes provision for written inquiries to sellers and seller’s agent in regards to known psychological stigma on a property.  Agents cannot disclose information about psychological stigmas verbally, but are required to reply to written requests truthfully, to the best of the owner or agent’s knowledge.  Apparently refusing to disclose in writing is not an option under Delaware law.  There is no obligation to disclose, however, if a written request is not made.   

In the case of disease however, agents are expressly directed to make no disclosure. The law makes no mention of the buyer’s responsibility in this case.  Delaware protects not only sellers and agents, but also the buyer’s agent and the appraiser.

Delaware’s law lists psychological stigmas including homicide, felony, suicide AIDS/HIV, and any other diseases not communicable via occupancy. The stigma list does not include arson. Delaware law requires disclosure of arson (DEL. CODE ANN. tit. 24, § 2929-2930(f) (2005).

District of Colombia

The statutes are written to reflect the opinion that psychological stigmas are not material fact in real estate transactions and therefore sellers and brokers are not obligated to disclose them. Section 45-1936(f)(1) of the District of Columbia law prohibits causes of action being brought against sellers and agents who fail to disclose said psychological impacts.

Florida

Florida has perhaps the least comprehensive stigmatized property statute of any state that bothered to write one. The statute concerns itself only with former occupants who had contracted HIV/AIDS, warning brokers that it is a non-material fact that should not be disclosed to a prospective buyer.  Causes of action are prohibited against sellers, sellers’ agents and buyess’ agents for nondisclosure.  The statute covers no other communicable diseases nor crimes such as homicide or other felonies (FLA. STAT. ANN. Ch. 689.25).

Georgia

 Georgia protects against causes of action against sellers or sellers’ agents for failure to disclose stigmas which it lists in the statute’s subsections. HIV/AIDS and other types of communicable diseases not felt easily transferred by occupancy are nondisclosure items as well as stigmatizing crimes such as murder, suicide or other felonies.  

Georgia’s law does make clear that an agent or seller cannot make false representation in regards to the history of a property.  The law stipulates that an owner or agent, if asked, must answer truthfully about the history of a property, although an owner does have the option of keeping silent.  Of course an owner who refuses to divulge information about a property is in effect confirming a stigmatized history merely by refusing to answer (GA. CODE ANN. § 44-1-16(1)).

Hawaii

Hawaii’s property statute was rather significantly changed in 1996. What hasn’t changed was the provision that protects agents from non-disclosure.  According to Hawaii state law, anything that doesn’t affect the structure or physical property need not be disclosed. Thus a suicide or murder need not be disclosed because they have no effect on the physical building or a property’s improvements (HAW. REV. STAT. ANN. § 508D-8).

 Indiana

Indiana has an extensive stigmatized property statute listing not only crime and death impacts and disease impacts, gang activity on the property, the firing of a firearm on the property that involved the police, and manufacture of illegal drugs on the property. Such activities can affect a property beyond a simple psychological stigma. Keep in mind that, not knowing that the ownership of a property has changed, a gang may continue to have activity in the area. Or a now defunct meth lab may have leaked chemicals onto carpeting that burns the new residents (which did happen to an unwitting new homeowner).  

Indiana lists all these impacts and then exonerates the seller and sellers’ agents from voluntarily disclosing the information to potential buyers. They are also not liable for disclosure if they refuse to disclose information to a buyer.  As many state law does, it does reiterate that sellers and sellers’ agents may not intentionally misrepresent facts concerning psychological impacts if a direct inquiry is made by a potential buyer (IND. CODE. § 24-4.6-2.1-2).

Kentucky

Like Florida, Kentucky’s statute concerns itself only with former occupants with HIV/AIDS. Kentucky law states that such illness is not a material fact and thus does not affect the value of a property. Therefore there is no requirement to disclose such information.  The law also protects sellers and sellers’ agents and buyers’ agents against causes of action (KY. REV. STAT. ANN § 207.250(1)).

Louisiana

Section 1468(A) of Louisiana property statute lists, “facts or suspicions” that might cause a property to be considered psychologically impacted. It lists the usual AIDS/HIV or diseases not likely transmittable by occupancy or death via homicide or suicide or other felony.  The statute declares that such stigmas are not material fact impacting the value of the property and therefore do not need to be disclosed. The law prohibits causes of action against sellers and sellers’ agents for failure to disclose psychologically impacting information (LA. REV. STAT. ANN. § 37:1468).

 Maryland

Maryland’s stigmatized property statute appears in two separate but nearly identical entries in the Property Code and also the Business Occupations and Professions Code. The first subsection lists information that is not considered material fact for real estate transactions. The usual suspects are listed, although Maryland also lists natural death along with homicide, suicide and felony.  The statute protects seller, sellers’ agents and buyers’ agents from civil or criminal liability should they fail to disclose psychologically impactful information. The Business Occupations and Professions Code also stipulates that brokers and salespersons are immune from disciplinary action and personal liability should they fail to disclose such information (MD. CODE ANN. REAL PROP. § 2-120; MD. CODE ANN., BUS. OCC. & PROF. § 17.3221).

 Massachusetts

 Massachusetts is a caveat emptor state, a fancy way of saying buyer beware. And if you’re buying in Massachusetts you better beware, because according to the state statutes brokers and sellers are not legally required to inform perspective buyers of suicides, homicides, felonies or alleged paranormal activity (Vetstein). They are also not required to inform a potential buyer of illnesses of former occupants such as HIV or AIDS or any other illnesses that are not considered easily transmittable by occupancy (Massachusetts General Laws Chapter 93, section 114).

 The law goes on to state, “…No cause of action shall arise or be maintained against a seller or lessor of real property or a real estate broker or salesman, by statute or at common law, for failure to disclose to a buyer or tenant the real property is or was psychologically impacted (MASS. ANN. LAWS ch. 93, § 114).

Nevada

Nevada law is interesting for a couple of different provisions it makes.  Nevada has all the usual wording; dividing the psychological impacts into two neat categories disease/AIDS/HIV and Death/Suicide/Felony stigmas. However, Nevada also lists death by any cause making it only one of four states to include death on a property by any means as a psychological stigma against the property. An exception in Nevada’s stigma law are deaths caused by a condition of the property (NEV. REV. STAT. § Subsection 44.770(1)).

 Sellers and sellers’ agents are exempt from causes of action for failure to disclose.  A sub-section also provides protection to the buyer’s agent unless “otherwise provided in an agreement between a buyer and his agent [my emphasis] (44.770(3)).”  Nevada’s law makers undoubtedly felt that it was only a very sophisticated or an extremely nervous buyer that would demand such an agreement beforehand. It is also highly unlikely that the buyer’s agent would suggest signing such an agreement before entering into an agreement with a buyer (NEV. REV. STAT. § Subsection 44.770(1)).

 New Hampshire

New Hampshire’s stigma statute lists only death and crime type psychological impacts, making no mention of communicable disease whatsoever.  The law states that sellers and sellers’ agents are not required to disclose that a property was the site of a homicide, suicide or other felony unless the potential buyer makes a request for the information and if the seller or the seller’s agent has knowledge of such a stigma. Thus, buyers in New Hampshire should be prepared to ask the question, if stigmas are a concern.

The law protects sellers and sellers’ agents from causes of action for failure to disclose such information about deaths or crimes on the property, and further protects them from causes of action should they disclose.  A further subsection (II) suggests that sellers and seller agents can negotiate “contractual rights of disclosure.”  The wording, I speculate, is meant to encourage sellers and their agents into coming to some type of pre-agreement on the subject (N.H. REV. STAT. ANN. § 477:4-e(I)(b).

New Mexico

Section 47-13-2 of New Mexico’s property statute includes “’the seller, lessor or landlord of real property, including a participant in an exchange of real property and any agent involved in such a transition (Thurlow, 1996).’” These people have no sworn duty to disclose psychological stigmas and are not held liable should they not disclose such stigmas.  47-13-3(A) protects the persons mentioned from any cause of action that might arise for failure to disclose.  And 47-13-3(B) notes specifically that failure to disclose is not grounds for rescission; in other words a buyer attempting to back out of a deal. The statute goes on to list psychological stigmas in a comprehensive fashion including natural death, homicide, suicide, felony including battery and sexual assault. It also includes the HIV/AIDs transmittable diseases exception (N.M. STAT. ANN. § 47-13-2).

New York

Passing their stigmatized property statute in 1995, it became hailed as the “Haunted House” statute, though nowhere in the language do the law makers mention haunted houses.  Instead they state the usual protections mentioning disease type stigmas and death/crime type stigmas and stating that neither is a material defect; therefore not anything that would affect the value of the real property.  They list homicide, suicide but also mention death by accident or natural cause or the committing of any crime considered a felony under the statute.  

 The law prohibits the filing of causes of actions against owners, occupants and their agents should they fail to disclose. Real estate agents and brokers are also protected from any disciplinary action for failure to disclose stigmas.   

New York, however, does make provision for potential buyers to inquire via written inquiry about possible psychological stigmas attached to a property. The buyer or their agent must present the written inquiry to the seller or the seller’s agent.  The seller has the option of whether or not to respond to the inquiry.  If they choose to respond, the seller answers similarly in writing which is then returned to the buyer or buyer’s agent.  Again the idea is, that should a seller refuse to respond they are in a way admitting that a property has a psychological stigma by their refusal alone (N.Y. REAL PROP. LAW § 443-a (1)(a)).

 North Carolina

North Carolina’s brief stigmatized property statute merely states that the fact that a former occupant was either seriously ill or died on a property is not a material fact in a real estate purchase.  The only provision to buyers is the caveat that a seller or seller’s agent cannot make false representations regarding a former occupant (N.C. GEN. STAT. § 39-50).

 Oklahoma

Oklahoma handles their stigmatized property law under their real estate code.  The law notes that property stigmas are not a material fact in a real estate transaction, and therefore do not need to be disclosed to potential buyers. Psychological stigmas are listed as, but have a caveat that they are not limited to, past occupants that had contracted HIV/AIDS or another disease not easily transmittable by occupancy or that the property was the site of a homicide, suicide or other felony. Causes of action for nondisclosure are prohibited against sellers and sellers’ agents (OKLA. STAT. § 858-513 (1991).

 Ohio

 Ohio has limited protection for nondisclosure of psychological stigmas.  While the seller is not required to disclose psychological stigmas, she/he is liable for the harm caused by misrepresentations (OH Homeowner Disclosure Law, 45 Case W. RES. L. REV. 1149, 1180-82).

Oklahoma

Oklahoma’s law notes that psychological stigmas are not a material fact in the property transfer and do not need to be disclosed to an interested buyer.  It lists the usual HIV/AIDS/disease and homicide/suicide/felony distinctions under psychological impacts.  The law protects sellers and sellers’ agents from causes of action against them by a buyer, should they fail to disclose (OKLA. STAT. § 858-513(A)). 

Oregon 

Oregon’s statute is quick, concise and to the point. It notes that psychological impacts are not material facts in a transaction and that owners and agents are protected against causes of action. Oregon lists death of a prior occupant by murder or suicide or the fact that the prior occupant had contracted HIV or AIDs.   

The statute notes that a seller nor sellers’ agent should disclose that an occupant had contracted or had died of HIV/AIDS, citing the chapter entitled “Civil Rights; Unlawful Employment Practices. (OR. REV. STAT. § 93.275(1)).

Rhode Island 

Rhode Island’s statute remunerates that psychological stigmas are not material facts in a real estate transaction.  The statute then defines such stigmas as AIDS/HIV/diseases not easily communicable by occupancy or places where a homicide, felony or suicide occurred.  Sellers and their agents are protected from causes of action in such suits where disclosure was not made. Rhode Island does make the point that while disclosure is not necessary, the law does not allow for false statements or conscious misrepresentations regarding the history of a property (R.I. GEN. LAWS § 5-20.8-6).

 South Carolina

Similar to Rhode Island’s law, South Carolina’s stigmatized property statute states that psychological stigmas are not a material fact in a real estate transaction. They list the psychological impacts as, “the fact or suspicion” that a former occupant had contracted HIV/AIDS (or other disease not transmitted via occupancy) or had died on the property from the disease (Thurlow, 1996). Causes of action against sellers and sellers’ agents for failure to disclose are prohibited (40-57-270(B). The law stipulates that sellers and their agents must still disclose physical conditions of a property, that being considered material facts. Further, the fact that they do not have to disclose psychological stigmas does not exempt them from making conscious misrepresentations about a property (S.C. CODE ANN. § 40-57-270(A-C)).

Tennessee

Tennessee covers sellers and real estate agents in their statute, all whom they say are protected from causes of action for failure to disclose psychological stigmas.  Tennessee considers HIV/AIDS or other diseases not easily transmitted by occupancy under their stigma law.  The law further defines psychological impact as “(1) an act or occurrence which had no effect on the physical structure of the real property, its physical environment or the improvements located thereon (2) [a] homicide, felony or suicide (Thurlow, 1996)(TENN. CODE ANN. § 66-5-207).”

Texas

 The state of Texas made provision for psychologically impacted property in their real estate law.  Protected from disclosure under the law are people who have contracted HIV/AIDS while occupying the property.  The law also covers death that occurred on the property through natural causes, suicide, or deaths caused by accident on the property not caused by the condition of the property.   Texas’s law makes the curious statement regarding agents listed as brokers, salespersons and sellers; remonstrating them that an agent really has no “duty to inquire about or disclose” psychological stigmas listed under the statute.  The interesting admission appears to be written in order to protect buyer’s agents in particular, who are after all working on behalf of the buyer and thus working in their interests (TEX. REV. CIV. STAT. ANN. Art. 6573a § 15E).

Utah

Utah takes the now redundant stance that an owner’s failure to disclose psychological stigmas is not a material fact in a real estate transaction.  Therefore, owners and their agents are not liable for failure to disclose a stigma. Utah law defines stigmas as both disease (read HIV/AIDS) not easily transmitted via occupancy and death or crime that occurred on the property (read suicide, homicide and felony) (UTAH CODE ANN. § 51-1-37).

Virginia

Virginia’s stigmatized property statute is nearly identical to Tennessee’s.  Owners and real estate agents are protected from causes of action against them for failure to disclose stigmas.  Included are revealing that a former occupant was infected with HIV/AIDS. They are further protected from disclosing that a property was the site, “of an act or occurrence which had no effect on the physical structure of the real property, its physical environment or the improvement located thereon:” homicide, suicide or felony (Thurlow, 1996). Virginia law protects owners and agents against causes of action for failure to disclose such stigmas to an interested buyer (VA. CODE ANN. § 55-524(A) Residential Property).

Wisconsin


Wisconsin’s statute comes out swinging with a warning to real estate agents, brokers and salespeople that they must not disclose any information that would constitute discrimination under the Fair Housing Act. Thus previous occupants with AIDS/HIV have their privacy protected by the statute.  The law continues that agents are not liable for failure to disclose anything that does not affect the physical condition of the real property.  The statute then goes on to state that real estate agents also need not disclose any nearby “adult family home” which seems to be a bizarre addition to the law.  Why lawmakers felt a nearby nursing or adult home would or could affect the market price of a property is anyone’s guess (WIS. STAT. ANN 452.23(2) (a)).
 

Resources



State Statute Listing
1.       Arizona                 36 ARIZ. L. REV. 757, 768 (1994)
2.       Arkansas              ARK. CODE ANN. § 17-10-101 (Supp. 2009).
3.       California             CAL. CIV. CODE § 1710.2(a), which initially protected nondisclosure only of an occupant’s HIV/AIDS status, was enacted in 1986.
4.       Colorado              COLO. REV. STAT. § 38-35.5-101 (2009).
5.       Connecticut        CONN. GEN. STAT. ANN. § 20-329ee (West 2008). ANN. § 20-329dd
6.       Delaware             DEL. CODE ANN. tit. 24, § 2930 (2005).
7.       District of Columbia                        D.C. CODE ANN. § 47-2853.198 (LexisNexis 2007),
8.      Florida                  FLA. STAT. ANN. § 689.25 (West 2008)
9.       Georgia                 GA. CODE ANN. § 44-1-16(a) (1)(B) (Supp. 2009).
10.   Hawaii HAW. REV. STAT. ANN. § 508D-8 (LexisNexis 2006).S.B. 3266, 18th Leg. Reg. Sess. (Haw. 1996
11.    Idaho    ID 38 IDAHO L. REV. 251 (2001).
12.    Indiana                IND. CODE § 24-4.6-2.1-2(1) (1995);
13.    Kentucky             KY. REV. STAT. ANN. § 207.250 (LexisNexis 2007).)
14.    Louisiana            LA. REV. STAT. ANN. § 37:1468 (2007).
15.    Maryland             MD. CODE ANN., REAL PROP. § 2-120& amp;. MD. CODE ANN. Bus. Occ. & PROF. § 17-22.1(a)(2)
16.    Massachusetts MASS. ANN. LAWS ch. 93, § 114 (LexisNexis 2005).
17.    Michigan             MICH. COMP. LAWS § 339.2518(a) 1996.
18.   Mississippi         MISS. CODE ANN. § 89-1-527 (1999)
19.    Missouri               MO. ANN. STAT. § 442.600 (West 2000). § 442.606
20.   Nevada                 NEV. REV. STAT. ANN. § 40.770(1)(b) (LexisNexis Supp. 2006).
21.    New Hampshire               N.H. REV. STAT. ANN. § 477:4-e (2001).
22.   New Mexico        N.M. STAT. ANN. § 47-13-2 (LexisNexis 1995).
23.   North Carolina   N.C. GEN. STAT. § 39-50 (Supp. 1995);
24.   New York             N.Y. REAL PROP. LAW§ 443a(1); NY 572 N.Y.S.2d 672 (N.Y. App. Div. 1991).
25.   Ohio Ohio's         Homeowner Disclosure Law, 45 Case W. RES. L. REV. 1149, 1180-82 (1995); Ohio revised Code Section 5302.30: Real Property Transferor Disclosure
26.   Oklahoma           OKLA. STAT. § 858-513(c)
27.   Oregon OR. REV. STAT. § 93.275 (2009).
28.   New Mexico        N.M. STAT. ANN. § 47-13-2(B) (LexisNexis 1995).
29.   Rhode Island                     R.I. GEN. LAWS § 5-20.8-6 (2004).
30.   South Carollina     S.C. CODE ANN. § 27-50-90 (2007).  S.C. CODE ANN. § 40- 57-270(A)
31.    South Dakota    
32.   Tennessee           TENN. CODE ANN. §66-5-207 (19996)
33.   Texas                    TEX. REV. CIV. STAT. ANN. art. 6573a, §15E(2) (Vest 1996
34. Utah                        UTAH CODE ANN.  §. 57-1-37 (1994).
35 Virginia                 VA. CODE ANN. § 55-524(A)

36. Wisconsin            WIS. STAT. ANN. § 452.23(2)(a)(West Supp. 1996).


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