Stigmatized property is property which buyers or tenants may shun for reasons that are unrelated to its physical condition or features. Homes which have been the sites of murders, suicide or which have been reportedly inhabited by ghosts all qualify as stigmatized properties. It is a psychological taint rather than a taint associated with the physical condition of a property. The National Association of Realtors defines stigmatized property as property that has been "psychologically impacted by an event which occurred or was suspected to have occurred on the property such event being one that has no physical impact of any kind."
The Amityville Horror house (pictured above) is an example of a property contaminated by a sordid past. It appears cheery and comfortable but it's history is anything but. Six of seven members of the Ronald DeFeo family were murdered here in 1974 by DeFeo's oldest son who later was convicted of all crimes. George and Kathy Lutz moved in a year later and began to report unusual and bizarre paranormal activity. These events later became the subject of the best selling book and movie The Amityville Horror. Another movie Grave Secrets: The Legacy of Hilltop Drive chronicles true events surrounding a house located near an abandoned graveyard where two human graves were found during excavation for a swimming pool. A series of inexplicable paranormal events followed this discovery. The Jon Benet Ramsey house and the house where Nicole Bown Simpson and Ronald Goldman were murdered are also examples of properties tainted by association with a horrific event.
The subject of stigmatized properties is a complex one and the rules vary state by state. Currently about half of the states have laws requiring disclosure of psychological impairment. Other states such as California have passed legislation limiting the requirement for disclosure of a murder or other violent event to three years after the event. Even in the states with disclosure statutes there is variability in what defects must be disclosed.
Where I live in Michigan there is no hard and fast stigma disclosure statute. The language in the form required under Michigan's Seller Disclosure Act suggests that residential sellers are not required to disclose information about the properly beyond it's physical condition. Since a seller normally does not make any form of representation about the stigmatizing event a claim or fraud or misrepresentation can not be sustained.
Yet many believe that he "bad karma" associated with a violent history or a gruesome reputation should mandate disclosure. Even thought the property may not be changed in a physical way the perception of it has changed and the buyers willingness to purchase may well be impacted. Stigmas also impact the value and future salability of a property.
Buyers make emotional rather than rational decisions when they purchase property. How a property "feels" is often the most factor when purchasing a piece of real estate. So would a property feel differently to a prospective buyer if they knew about the history or the psychic imprint associated with that parcel? With most purchasers that question can only be answered in the affirmative. Knowing that a property is tainted by association with murder, suicide or frightening paranormal phenomenon may well be a deal breaker. The lives and deaths of a home's former residents are considered to be a material consideration by many who want to make decisions based on full consideration of all factors.
What do you think? If you really loved a house would a home's sordid past impact your decision to buy? What about if you got a significant price reduction?
As for this girl-----I like to sleep at night. I'm taking no chances.
Statements in this post are my own and are not intended to reflect the views opinion or position of the Michigan Attorney General or the Michigan Department of Attorney General