Stigmatized Property

Murder, he said. Do you tell the buyers?

February 1, 2008

Q: I am in the process of listing a home in which the seller’s husband was murdered. Does the Code of Ethics require that I disclose the fact of the murder to potential purchasers?

A: According to Article 2 and Standard of Practice 2-5 of the Code, your obligation to disclose this fact depends on the disclosure requirements of your state’s laws. Article 2 requires that REALTORS® reveal any pertinent facts relating to the property or the transaction.

However, you’ll have to consult your state law to decide if the murder of the seller’s husband is pertinent and material. Standard of Practice 2-5 explains that “Factors defined as ‘non-material’ by law or regulation or expressly referenced in law or regulation are not pertinent” and thus do not have to be disclosed. Note that a material fact is one that could influence the decision of the buyer to purchase or affect the amount that buyer might pay.

In your situation, the first question to ask is whether your state law provides that “psychological impacts” on property, such as a murder or suicide at the site, are material facts. Several states, including Illinois and Missouri, have statutes that declare psychological factors are “non-material” and do not have to be disclosed to prospective buyers. If your state has this type of law, psychological impacts are not pertinent, and the Code does not require you to disclose them.

If your state does not have a law that excludes psychological impacts from disclosure, you must next ask yourself if the murder is a material fact. The Code of Ethics and Arbitration Manual advises that “any material fact that could affect a reasonable purchaser’s decision to purchase, or the price that a purchaser might pay, should be disclosed.”

Appendix II to Part Four of the Manual, as well as REALTOR.org’s “Field Guide to Stigmatized Property,” will give you more guidance on making your decision. More practically, it’s highly unlikely that an event such as a murder will remain a secret from the buyer. If the seller doesn’t disclose the information, the buyer will probably learn the information from the neighbors.

Bruce Aydt
columnist

Attorney Bruce Aydt, ABR, CRB, SRS, is a national real estate educator, a Missouri real estate broker, and past chair of the National Association of REALTORS® Professional Standards Committee.

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