Do buyers have a right to know if a house is haunted? The law requires certain structural details to be disclosed when a home is up for sale, but what about paranormal details?
Although the wording may vary state to state, most real estate laws require sellers to disclose "material facts" such as structural concerns, the age of the roof and shingles, leaks in the foundation and walls, existing mold and mildew, and total square footage. Material facts can also include other items that affect the house's value such as the amount of property taxes, details about individuals who claim to have an interest in the house, or overlaps on adjacent properties.
Items not considered material facts include personal information about a seller, such as pending foreclosure or divorce, illnesses of the seller, and the seller's reasons for moving. What if the seller's reason for moving involves the paranormal? Remember the unhappy inhabitants in Poltergeist, The Amityville Horror, and The Others? Must a seller disclose whether their property is haunted? Or if a heinous crime, murder, or suicide occurred on the property?
Death on a Property May Be Material
In California, the Association of Realtors addressed the issue of death disclosure requirements. Civil Code ¤1710.2 states death on a property need not be disclosed if it occurred more than three years prior to the sale. The statute does require disclosure of a death more than three years old if the buyer asks. Many brokerage firms have supplemental disclosure forms that specifically inquire about death. To avoid liability, it is recommended the seller disclose a death if it occurred within the last three years and let the buyer decide. Some states have even gone further requiring home sellers to disclose "stigmas" attached to a property, which can include proximity to homeless shelters and if it was the scene of a violent crime.
In a famous 1991 New York case, a buyer sued the seller and the seller's Realtor for failure to disclose the house's ghostly reputation. Prior to putting the house up for sale, the seller wrote about her bumps in the night for the local paper and Readers' Digest, but the buyers were unaware of the home's reputation. Although the court did not rule nondisclosure of the house's reputation as fraudulent, it did allow the buyer to back out of his contract and get his down payment back.
According to a study by two business professors at Wright University, houses where murder or suicide have occurred can take 50% longer to sell, and at an average of 2.4 percent less than comparable homes. A California appraiser who specializes in diminution in value issues says that a well-publicized murder generally lowers selling price 15 to 35 percent.
Sometimes, a house's macabre past is an asset rather than a liability, especially if the gruesome past involves celebrities or legends. Ghosts can be a selling point for some towns that rely on their dead inhabitants for tourist appeal. Cities like St. Augustine, New Orleans, and Hollywood all provide ghost tours of popular sighting sites. In St. Augustine, a legendary haunted-house-turned-restaurant lures in diners with the prospect of seeing the house's former owner—a woman dressed in white who purportedly appears in mirrors and walks the second floor.
Do I Have to Disclose?
Sellers should disclose grisly facts about the house, so they will not be "haunted" later. Even if not required by state law, in order to soothe prospective buyers and avoid lawsuits, sellers should be upfront about their home's paranormal guests or ghoulish histories.
This article was originally published in January, 2005 and updated October, 2010.