Stigmatized property

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.

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:

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.

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Wikipedia