Halloween is a couple weeks away, and sellers with haunted properties already have ghosts and goblins on their minds.
If you have a property that’s considered haunted, do you need to disclose this information to potential buyers? Though it may seem silly to even ask such a question in this era, it’s a surprisingly important question from a legal standpoint.
It’s an unfortunate fact that most haunted houses stay on the market for longer and sell for lower than market value but it’s hard to blame potential buyers. Would you want to live in a haunted house?
Though the laws differ from state to state, in many cases you do in fact need to disclose that a house is haunted. The reason why may vary from state to state but could be that your property is what is referred to as stigmatized.
What is Stigmatized Property?
For a property to be considered stigmatized, it must have been “psychologically impacted by an event, which occurred or was suspected to have occurred on the property, such event being one that has no physical impact of any kind.” Though there are many types of stigmatized properties, in the context of haunting, this event (or suspected event) can range from the property functioning as the site of paranormal occurrences, to suicides, or even murders.
What is a Material Fact and is Haunting an Example of One?
In real estate, a material fact is a piece of information which could cause a buyer to make a different decision about their offer price or ultimately buying than if it were not disclosed. In other words, in real estate, a material fact is something that might make you change your mind about whether or not you want to buy a property, or if you still do, how much you are willing to pay for it.
What about in Iowa?
In some states, the seller is only responsible to disclose material facts to a potential purchaser. Iowa’s disclosure statute requires something greater. Specifically the Iowa Code requires a seller to disclose “known information related to the condition of the property and important characteristics of the home.” The Iowa Administrative Rules (193E(14)) provide an outline of the minimum required disclosure, but does not limit a seller to only disclosing information about those items.
A good rule of thumb is to disclose EVERYTHING you have knowledge of, even if you have previously repaired the item. This allows the potential buyer to investigate further into disclosed conditions and have a more complete understanding regarding the condition of the property they are purchasing.
There is no easy answer regarding whether or not haunting is a material fact. But luckily for you, Iowa’s statute makes it easy for you. If you know your property is haunted, you must disclose this to your buyer. Failure to do so, you do at your own risk.
If you are hoping to sell a stigmatized property in the near future, it can be a bit tricky to navigate the process of what you are required to disclose and what you are not. Need help? Reach out to our real estate law experts at Danilson Law for a consultation. Call us today at (515)512-5500.
