Why Is It Important for Licensees to Understand the Definition of a Stigmatized Property

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While some people are naturally put off by unexplained noises, furniture movements or temperature fluctuations, others might see it as an advantage. Because paranormal activity is not considered what real estate agents call a “material fact,” this stigma often doesn`t appear in traditional real estate disclosures. You usually have to ask previous owners about their agent and hope for transparency to find out if any obsessive activity has been experienced in the house. In Hawaii, seller is not required to disclose an event or circumstance that “did not affect the physical structure or physical environment.” This would cover any fact that stigmatizes a property. Document Reference: Law 508D-8 If previous owners had high debts, regular visits from aggressive collectors could leave the house with a stigma. As a potential buyer, there are two things you can consider here. First of all, you probably need to be prepared to firmly inform all collectors who come forward that the previous owners have moved. Second, you may want to investigate unpaid property taxes from previous owners. If they move without paying what they owe, you could be responsible to the IRS for tax arrears. North Dakota is a “suspicious buyer” state, meaning facts about stigmatized events do not need to be disclosed. In addition, an agent may not disclose facts authorized by the seller. Arkansas considers any information that “psychologically affects” a property as an intangible act without disclosure.

This includes any information about sex offenders nearby. Reference: code 17-10-101. While this list gives you a good overview of common types of stigmatized properties, other stigmas can affect a home`s resale value. Before buying a home, you should ask the previous owners and the real estate agent its history. A quick internet search can also help uncover potential red flags. Public stigma can also be an issue if the house has been the scene of a sensational crime. Owners of stigmatized properties are often annoyed by the constant stream of callous lookalikes slowly passing their property and taking pictures. Even worse, they may try to get in because of their morbid curiosity.

Stigmatized properties often struggle to find a buyer, especially homes that have been involved in a widespread and sensational event. A study by Write State University found that stigmatized homes sold 3% less and took 45% more than “immaculate” homes. There is no explicit language in the law regarding stigmatized characteristics. However, real estate agents are required to “disclose facts that a licensee has reasonable grounds to believe could directly affect the future use or value of the property.” A buyer could use this language to argue in court that stigma (such as a murder that took place in the home) affects the future value of the home. “Some buyers include a clause in the contract that says there are no psychological problems with the property,” she adds. “If sellers hide something, it can come back to them and be a problem later.” The State of Illinois does not require non-physical defects in a home to be disclosed. This would include anything that stigmatizes good. Reference: Statue 454/15-25 In New Jersey, a real estate agent is not required to disclose psychologically disturbing facts about a home. However, the New Jersey Supreme Court noted that a real estate agent would be required to disclose such a fact if it is “so closely related to the physical condition of the property that it must be disclosed.” An example of this would be when someone dies in a house due to toxic mold. The occupant died due to the condition of the property, and therefore this death must be disclosed. In addition, real estate agents must be honest when asked about deaths that have occurred on the property. Reference: 11:5-6.7 Allen does not often encounter properties that have been the scene of murders, suicides, or ghost sightings.

In his Newmarket office, the most common stigma is about the location of a property near a cemetery.