Listing real property for sale can be a nerve-racking process. Sellers want to list at the right time to optimize how much they make through the transaction. They often secure help staging the home to make it as attractive as possible to potential buyers. Of course, they can’t misrepresent the property’s condition to increase its perceived value. They need to protect themselves with the right paperwork, including disclosures about the condition of the property.
State law requires that sellers provide honest and accurate information about the condition of different property systems. People need to know about any latent defects that could require correction in the future. Disclosure documents typically prioritize physical property conditions. Sellers have to honestly disclose any known issues with the plumbing, electrical system or foundation.
There are other potential issues with the property that could affect the buyer’s use of the property or its value when they sell it later. The stigma attached to the property could deter others from buying the home in the future. Do sellers have to make disclosures about potentially stigmatized properties?
The onus is on the buyer when it comes to stigma
Sellers have a clear legal obligation to inform prospective buyers about potential property issues. They cannot claim a lack of knowledge or list the property in as-is condition to avoid informing buyers about issues.
However, disclosure documents generally do not include questions about property stigma. In other words, sellers do not automatically need to disclose issues that could have a psychological impact on the community or others who might consider buying the property in the future.
Examples of stigma-generating issues include murders and suicides that occur at the property. Additionally, allegations of paranormal activity can lead to property stigma and may have psychological consequences for owners. Proactively disclosing stigmatizing issues is not mandatory. However, sellers must provide honest answers if buyers ask about property stigma, such as hauntings and similar incidents.
Learning more about the laws that apply to residential real estate transactions can help sellers and buyers protect themselves. Disclosures about property stigma are often only necessary if buyers make specific inquiries. People who know the rules can better assert themselves when looking at properties and/or avoid allegations of disclosure violations after a closing.