By: Terry Bennett
Would you consider buying a home that was thought to be haunted? What about a home where a murder occurred? Properties like these are called stigmatized properties. A stigmatized property could be a house thought to be haunted, a house where a murder, suicide or violent crime occurred, or a house infected with a contagious disease. Does such a stigma constitute a defect in the property that should be disclosed to a potential buyer? In Kentucky there is no specific law concerning whether sellers need to disclose what makes a property a stigmatized property. Other states have responded differently.
Several states have created specific statutes adding “stigmatized property” verbiage to their statutes. Those jurisdictions usually recognize several forms of stigmatized property. One stigma 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 of the jurisdictions require full disclosure of a criminal stigma. Some jurisdictions require sellers to reveal if a murder or suicide has occurred on the premises. California law requires disclosure if the event occurred within three years. Some state even require a potentially haunted house to be disclosed a buyer. When disclosure is mandated, the statutes vary as to whether the full facts surrounding the stigma or only specific facts should be disclosed.
To complicate matters further, even if the law does not require disclosure by the seller, the code of ethics governing the realtor may require that the realtor reveal the stigma if the realtor knows about it and believes it will affect the value of the property.
As a seller, you may want to decide whether a murder, suicide, violent crime, ghost, or contagious disease has created a stigma and a potential defect on your property. It may be better to disclose it up front than to close the sale and the buyer find out later about the facts surrounding the property.
If you have any legal questions about your real estate property, don’t hesitate to contact a lawyer. The attorneys at Skeeters, Bennett, Wilson & Pike want to make sure you don’t accidentally find yourself in a lawsuit.
Terry joined the practice in 1974. His areas of focus include personal injury law, real estate law, probate law, estate planning, business law, corporations, and adoptions. He is admitted to practice before the United States Supreme Court, United States Court of Appeals 6th Circuit, United States District Court Western District of Kentucky, United States Court of Military Appeals, and all Kentucky courts.
A Hardin County native and former Army office in the Judge Advocate General (JAG) Corps, Terry graduated from William and Mary in Virginia with an undergraduate degree in government. He received his Juris Doctorate from Wake Forest Law School in Winston Salem, North Carolina, where he graduated with honors.