In real estate, stigmatized property is property which buyers or tenants may shun for reasons that are unrelated to its physical condition or features. These can include death of an occupant, murder, suicide, serious illness such as AIDS, and belief that a house is haunted. Controversy exists regarding the definitions of stigma and what sorts of stigma must be disclosed at sale, with local jurisdictions varying widely in their interpretation of these issues.
It is argued that the seller has a duty to disclose any such history of the property. This, in practice, falls into two categories: demonstrable (physical) as well as emotional. These guidelines vary from jurisdiction to jurisdiction.
Types of stigma
Many jurisdictions recognize several forms of stigmatized property, and have passed resolutions or statutes to deal with them. One issue that separates them is disclosure. Depending on the jurisdiction of the house, the seller may not be required to disclose the full facts. Some specific types must always be disclosed, others are up to the jurisdiction, and still others up to the realtor.
The types include:
- Criminal stigma: the property was used in the ongoing commission of a crime. For example, a house is stigmatized if it has been used as a brothel, chop shop, or drug den. In the case of drug dens, some drug addicts may inadvertently come to the address expecting to purchase illegal drugs. Most jurisdictions require full disclosure of this sort of element.
- Debt stigma: Debt collectors unaware that a debtor has moved out of a particular residence may continue their pursuit at the same location, resulting in harassment of innocent subsequent occupiers. This is particularly pronounced if the collection agency uses aggressive or illegal tactics.
- Minimal stigma is known to, or taken seriously by, only a small select group, and such a stigma is unlikely to affect the ability to sell the property; in such a case, realtors may decide to disclose this information in a case-by-case basis.
- Murder/suicide stigma: Some jurisdictions in the United States require property sellers to reveal if murder or suicide occurred on the premises. California state law does if the event occurred within the previous three years. To protect sellers from lawsuits, Florida state law does not require any notification. In North Carolina, sellers and agents do not have to volunteer information about the death of previous occupants, but a direct question must be answered truthfully.
- Phenomena stigma: Many (but not all) jurisdictions require disclosure if a house is renowned for "haunting", ghost sightings, etc. This is in a separate category from public stigma, wherein the knowledge of "haunting" is restricted to a local market.
- Public stigma : when the stigma is known to a wide selection of the population and any reasonable person can be expected to know of it. Examples include the Amityville Horror house and the home of the Menendez brothers. Public stigma must always be disclosed, in almost all American and European jurisdictions.
At least in the United States, the principle of caveat emptor ("let the buyer beware") was held for many years to govern sales. As the idea of an implied warranty of habitability began to find purchase, however, issues like the stigma attached to a property based on acts, "haunting", or criminal activity began to make their way into legal precedents.
In Stambovsky v. Ackley the New York Supreme Court, Appellate Division, affirmed a narrow interpretation of the idea of stigmatized property. The court held that since the property in question was previously marketed by the seller as a "haunted house" he was estopped from claiming the contrary. The majority opinion specifically noted that the veracity of the claims of paranormal activities were outside the purview of the opinion. Notwithstanding these conclusions, the court affirmed the dismissal of the fraudulent misrepresentation action and stated that the realtor was under no duty to disclose the haunting to potential buyers. Several states have created specific statutes in the US adding "stigmatised property" verbiage to their legal code.
Famous homes, such as those used in television productions or filmmaking, can also be stigmatized by increased traffic from fans wanting to see the house in person. One example is the house at 112 Ocean Avenue in Amityville, New York where Ronald DeFeo, Jr. murdered his family, later made famous by best-selling book The Amityville Horror and numerous film adaptations. The Lutz family claimed the house was haunted by evil spirits who drove them out. Their claims are supported by paranormal investigators such as Ed and Lorraine Warren and Hans Holzer, but dismissed as fraudulent by skeptics such as Robert Carroll. Since the film's release, the house has been renovated and the address changed in an attempt to prevent sightseers from disturbing the neighborhood.
- Tomei, Marilyn E. (Spring 1992). "ANSWERLINE: STIGMATIZED PROPERTIES" (PDF). Real Estate Bulletin. North Carolina Real Estate Commission. 23 (1): 5.
- "Title XL > Chapter 689 > Section 25: Failure to disclose homicide, suicide, deaths, or diagnosis of HIV or AIDS infection in an occupant of real property". 2011 Florida Statutes. The Florida Senate. 2011. Retrieved November 17, 2011.
- Reilly, John W. (2000). The Language of Real Estate. Dearborn Real Estate Education. pp. 312–315. ISBN 978-0-7931-3193-8.
- Stites, Jean (2004). Adventures in Real Estate. Lulu. p. 92. ISBN 978-1-4116-0560-2.
- Pancak, Katherine A. (2004). Connecticut Real Estate Practice and Law. Dearborn Real Estate Education. pp. 194–195. ISBN 1-4195-0167-4.
- Carroll, Robert (11 January 2011). The Skeptic's Dictionary: A Collection of Strange Beliefs, Amusing Deceptions, and Dangerous Delusions. John Wiley & Sons. pp. 158–. ISBN 978-1-118-04563-3. Retrieved 10 May 2013.