Stigmatized Property

A Property Buyers or Tenants May Shun for Reasons Unrelated to its Physical Condition or Features

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.

Famous homes, such as those used in television or movies, can also be stigmatized due to increased traffic from fans wanting to see the house in person. One such home is the house that was made famous in the film The Amityville Horror. The house which was located at 112 Ocean Avenue in Amityville, New York was the site where Ronald DeFeo, Jr. murdered his family, and a little over a year later the Lutz family claimed that evil spirits drove them from their home. The claims made by the Lutzes have since been thoroughly debunked, and eventually revealed to be part of a fantastical hoax. Since the film's release, the house has been renovated and the address changed in an attempt to prevent sightseers from disturbing the neighborhood.

The argument behind stigmatized property maintains that it is the seller's responsibility to disclose any such past history of the property. This, in practice, falls into two categories; demonstrable (physical) as well as emotional. These guidelines vary from state to state

This property has been on the market a dozen times over the past 30 years. It is believed to be haunted

Legal Status of Stigmatized Property

At least in the United States, the premise of Caveat emptor or "let the buyer beware" was held for many years as the law for sales transactions. 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 precedence.

The court arguments involved in Stambovsky v. Ackley affirmed a narrow interpretation of the idea of stigmatized property. The New York Supreme Court, Appellate Division, held that since the property in question was previously marketed by the seller as a "haunted house" he was estopped to now claim 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 "stigmatized property" verbiage to their legal code.

Forms of Stigmatized Property

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. However, 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:

  • 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. The example given above of the house used in the Amityville Horror is a good example, but another example would be the home of the Menendez brothers. Public stigma must always be disclosed, in almost all American and European countries.
  • criminal stigma: the fact that the property was used in the ongoing commission of a crime. For example, houses that were chop shops, drug dens, brothels, or other heavily criminalized properties are stigmatized due to their association with criminals. 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.
  • Murder/Suicide stigma: Most jurisdictions require realtors to reveal if murder or suicide occurred in the house.
  • Debt stigma: Debt collectors not aware that a debtor has moved out of a particular residence may continue their pursuit at the same location, resulting in harassment to innocent subsequent occupiers. This is particularly pronounced if the collection agency uses aggressive tactics.
  • Phenomena stigma: Houses that are renowned for being "haunted", have ghost sightings, etc are required to be revealed by many (but not all) jurisdictions. This is in a separate category from public stigma in situations where the knowledge that the house is "haunted" is restricted to a local market.
The idea of "minimal stigma" -- where only a small, select group hold that a house is stigmatized and the likelihood of such a stigma affecting a seller's ability to sell the property, is almost universally rejected. Realtors may disclose this information as they see fit.

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