Several days ago an article appeared about a homeowner who sued her real estate agent and the seller of the property she bought because she discovered from the neighbors that there had been a murder in the house. This buyer became very upset about the thought that this had happened in her home and that she was not made aware of the fact before she bought the property. She believed that this information had been deliberately withheld from her.
This is called a Psychologically Impacted Property and the laws on disclosure are State law. Each state requires real estate agents faced with this type of disclosure to handle it differently. It runs the gambit from no requirement to full disclosure.
In Lousiana the law states that the fact that a home that has been the site of a homicide, or a felony or a suicide is not a material fact or material defect that must be disclosed in a real estate transaction. A Psychology Impacted Property is different than having to disclose Material Defects. If your property has material defects those need to be disclosed. A material defect is not a broken window but things of more significance:
A material defect is a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property, or that poses an unreasonable risk to people. The fact that a system or component is near, at or beyond the end of its normal useful life is not, in itself, a material defect.
From Material Defects Defined for Home Inspectors – InterNACHI
This raises some interesting questions for me. If I had knowledge of a murder in a property as a listing agent representing a seller my obligations are to be obedient to that seller and I would have to obtain permission from that seller before I could disclose that murder to a buyer’s agent. A seller might not want to disclose a murder because some buyer’s might either not buy their property because that fact is upsetting to them or a buyer might consider that a way to get a price reduction.
I always recommend to a home owner to disclose everything you know because that is only fair to the buyer and that is how you would like to be treated and you can’t be held responsible for what you don’t know and can’t disclose, however that is not the law.
There is a requirement in Louisiana for a seller to provide a Property Condition Disclosure Form to a potential buyer but this form is quiet on the question of Psychologically Impacted Property. So if you found yourself in this situation would you disclose a murder, suicide or felony that occurred on a property you were trying to sell?
In the State of Louisiana:
§1468. Psychologically impacted property
A. The fact or suspicion that a property might be or is psychologically impacted, such impact being the result of facts or suspicions, including but not limited to:
(1) That an occupant of real property is, or was at any time suspected to be, infected, or has been infected with Human Immuno-deficiency Virus or diagnosed with Acquired Immune Deficiency Syndrome, or any other disease which has been determined by medical evidence to be highly unlikely to be transmitted through the occupancy of a dwelling place; or
(2) That the property was, or was at any time suspected to have been, the site of a homicide, or other felony, or a suicide; is not a material fact or material defect regarding the condition of real estate that must be disclosed in a real estate transaction.
B. No cause of action shall arise against an owner of real estate or his or her agent for the failure to disclose to the transferee that the transferred property was psychologically impacted as defined in Subsection A.
Added by Acts 1991, No. 336, § 1.
Disclaimer; I must put this disclaimer on this post because all information that you read on a blog should be independently verified and you should not make real estate decisions without that independent verification. I am not an Attorney.