Since it’s Halloween, let’s see what the law says about haunted homes, murder, suicide, paranormal activity, which happened or, allegedly, are happening in the building in Massachusetts.
Stigmatized properties for sale in Massachusetts and Sellers’ disclosures
When Selling a home, a Seller has to abide by many rules and guidelines. Some of these are pertinent to facts that may affect the building, and in turn the transaction, and that the law may or may not require a seller to disclose.
A stigmatized property is a property in which paranormal activity is reported or suspected, or where heinous events have occurred, such as murder, suicide or both. The law also considers an association of the property a certain illness, but that has lost much of its impact nowadays, so it’s more about the former occurrences.
Each individual, seller or buyer, has a different sensitivity to the issue of stigmatized homes and for many it’s not an issue at all. The issue of disclosure of these events and situations could add uncertainty in a transaction if not clear.
There are already so many hurdles, like inspections, appraisals, concessions, fees, assists, waivers, endless negotiations and other disclosures that having to reveal a “paranormal presence” in a house could jeopardize a done deal by spooking even very motivated buyers.
The creaky floors could be something easy to fix and not likely to hold up a Purchase & Sale, but should they be thought to be due to paranormal activity and not having been disclosed by the seller, it could create an insurmountable issue. If it emerges after signatures have been exchanged it could provide a solid reason for legal claims based on lack of disclosure.
Unlike California, where you can go back 3 years and more for psychologically impacting events on the property, it’s not the case in Massachusetts! The law clearly states that, as it doesn’t fall in the category of material facts which have to be disclosed, it’s unnecessary “to disclose the fact that the property was the site of “…felony, suicide or homicide” or “…that the real property has been the site of an alleged parapsychological or supernatural phenomenon.”
No disclosure of any stigma on a property for sale is legally necessary in Massachusetts for a Seller, but for a Landlord or Lessor also.
The general “Caveat Emptor” (Buyer beware) rule applies here for home buyers and buying investors, who are expected to perform their due diligence in general, but especially with regards to this specific issue if they’re sensitive to such a property. If you’re a buyer, it would be advisable to talk to neighbors, research public records, and just ask clear and direct questions, especially if there’s a doubt, maybe rumors, maybe a feeling.
If home buyers ask clear questions about any stigma on the property, the seller cannot misrepresent or make false statement without giving cause of action, with half-truths also providing an opportunity for a successful lawsuit.
CHOICE TO DISCLOSE
What sellers can do, is to provide information voluntarily. If they so choose, it’s their prerogative, but NOT obligation and buyers can’t claim it as a right to have that information disclosed.
REAL ESTATE AGENTS
If the seller is represented by an agent, in the same way no disclosure is necessary. Due to the fiduciary nature of the relationship between agent and seller, the agent cannot provide the information voluntarily, unlike the sellers, and unless the sellers themselves authorize or instruct the agent to do so. The agent can always decline to represent the seller or terminate an agreement already in place if the information emerges after establishing the contractual relationship.
If an investor, like us at Proxima Investors, is involved in the sale, depending on the type of underlying deal, the investor is subject to the same disclosure rules as the seller, holding equitable interest in the property.
At Proxima Investors we have not come across a situation of stigmatized properties where it was a concern. However, since Massachusetts and New England in general, are old states with many antique and beautiful homes which have witnessed a lot. Homes can have a long and known history and the creaks and noises of old homes can be unsettling and inspire stories passed down over centuries, and sometimes made more “interesting”. Think about Salem in the 1600s when Massachusetts was a very populous state with lots going on. It’s only a matter of time that we will run into this issue. We already have invested in old and antique homes, which can be difficult to sell in this market, and we love them. Should the issue at some point arise, we believe that it should be dealt with on a case-by-case basis, as property stigmatizing events and situations have a different psychological impact depending on their uniqueness and the specific circumstances.
The bottomline for us is that we don’t have to disclose, but if there’s a particularly unsettling story linked to the house, we would probably not invest in it anyway…
Proxima Investors of Massachusetts are not attorneys and we do not provide legal advice and only state our opinions. Check with your attorney of choice before making any decision based on the content of this article. A useful resource can be found by clicking the link below to the relevant section of the state law: Real estate transactions; disclosure; psychologically impacted property.