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Paralegal 101: Stigmatized Property

According to Wikipedia, "Stigmatized Property is a controversial term used in the real estate business for property which buyers or tenants may shun for reasons that are unrelated to its physical condition or features. These can include murder, suicide or even AIDS in addition to a belief that a house may be haunted."

Steven Wright (Broker Associate/Realtor, Home Real Estate) wrote an interesting post that inspired me to write briefly on this subject. You can read his thoughts on the subject here (and please share your opinions with him):

http://activerain.com/blogsview/1862529/family-unaware-that-their-dream-home-belonged-to-a-horrible-serial-killer-broker-knew-

One of my favorite PDFs on this subject was created by The Professional Line. If you need a legal opinion regarding a property you believe may be negatively impacted by this issue you should always consult with an attorney. Your agent/broker is not the proper venue unless he or she is also a real estate attorney. We, as practitioners, can only explain a subject in general, generic terms to help you make an informed decision regarding your potential rental/purchase. Real estate laws and markets vary from state to state so it is very important for readers to understand what may be true for one situation may not be true for another. "Similar" is never "the same." Every home is unique and distinct with a specific geographic location that will trigger specifics in the local, state and federal laws.

In Sept of 2009 during a pop quiz by my attorney gal pals, I told you guys about an infamous haunted house non-disclosure case regarding a stigmatized property you may want to revisit so you can click the embedded links to the cliffnotes: http://activerain.com/blogsview/1257153/stambovsky-v-ackley-the-haunted-house-non-disclosure-case-169-a-d-2d-254-ny-app-div-1991-

To quote my previous post: "Issue: Under what circumstances may nondisclosure of information by the seller of a house to the buyer entitle the buyer to rescind a contract for sale?" Part of the answer: Although New York follows the caveat emptor rule and the buyer is required to inspect the house for any defects, in this case the buyer probably would not have been able to discover that the house was haunted had he inspected it. Since D knew about the problem and did not disclose it to P and P could not have detected it, P was awarded rescission of the contract for sale. The court held that the caveat emptor doctrine only acts against those who do not exercise their rights and who fail to take due care. In this case there was no clue or objective standard to apply to P regarding how the ghosts were to be discovered."

Do you know what I do? I tell my buyers to Google their addresses of interest before we write a binder. If you can find a house on-line and e-mail me to ask to see it, then you can also find the school website, sex offender registry and crime blotter without making faces at a Realtor after the fact if the neighbor gossips and tells you something spooky and you suddenly want out because we "failed to investigate this."

“Private investigator” shall mean and include the business of private investigator and shall also mean and include, separately or collectively, the making for hire, reward or for any consideration whatsoever, of any investigation, or investigations for the purpose of obtaining information with reference to any of the following matters, notwithstanding the fact that other functions and services may also be performed for fee, hire or reward; crime or wrongs done or threatened against the government of the United States of America or any state or territory of the United States of America; the identity, habits, conduct, movements, whereabouts, affiliations, associations, transactions, reputation or character of any person, group of persons, association, organization, society, other groups of persons, firm or corporation; the credibility of witnesses or other persons; the whereabouts of missing persons; the location or recovery of lost or stolen property; the causes and origin of, or responsibility for fires, or libels, or losses, or accidents, or damage or injuries to real or personal property; or the affiliation, connection or relation of any person, firm or corporation with any union, organization, society or association..." http://www.dos.state.ny.us/lcns/lawbooks/PIBailWtchGuard.pdf

Did you hire someone to help you rent or purchase a property or did you hire someone to gather intelligence about another human being's criminal associations, sexual deviance, medical condition, reputation or religious beliefs? As a former investigator to a government agency I'd be happy to give you a referral to a private investigator if you want to know about the murders that may or may not have taken place at a specific address. I am not going to gossip with you about the registered sex offender renting an apartment next door, the reputation of a school or disclose that my seller has a medical condition.

That's just me staying within the confines of my license... I compare homes for buyers and sellers, not people.

Other Interesting reading before I go:

Part 2. Paralegal 101: Disclosure

PDF Document Title: A Theoretical Underpinning of Neighborhood Deterioration and the Onset of Long-Term Crime Problems From Foreclosures (Working Paper)

It has interesting points regarding the effect of a stigmatized property and/or neighborhood, among other things (approximately 47pages).

 

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Comment balloon 5 commentsC Tann-Starr • October 11 2010 01:40PM

Comments

Well, great minds DO think alike.. sort of. I just wrote something along these lines.. ok, stretch it a bit but still. In CT you have to ask in writing to the seller if the house is haunted, and they may or may not answer. They dont' have to tell you. So telling people to google an address is a great idea. Checking out sex offender sites is wonderful, add Superfund and Brownfield sites to the list of ever growing things to check out. Or, hire a PI to do the work for you. I am now feeling stigmatized myself....

Posted by Andrea Swiedler, Realtor, Southern Litchfield County CT (Coldwell Banker Residential Brokerage) over 7 years ago

Wow - lots of really important facts and information here. Stigmatized Homes are everywhere - and it's a lawsuit waiting to happen, unfortunately, with no disclosures.

Posted by Carla Harbert, RE/MAX Omega: Lorain-Medina County Area (www.LorainCountyHomeSales.com) over 7 years ago

Here's part 2: Paralegal 101: Disclosure

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) over 7 years ago

This is very interesting because, if you truly believe in ghosts then they should be everywhere. But, in alll fairness, these are serious issues for some people.

Posted by Brian Madigan, LL.B., Broker (RE/MAX West Realty Inc., Brokerage (Toronto)) over 7 years ago

Brian, it really is. I've had former customers who said they couldn't live within 5 miles of a graveyard. That type of restriction makes it very difficult to show homes in Queens County because we have a lot of vintage graveyards. :-)

Posted by C Tann-Starr (Tann Starr & Associates, Inc.) over 7 years ago

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