AKA Psychologically affected…AKA Psychological Impact…AKA Psychological Stigmas

While no legal duty exists to disclose psychological stigmas, it may be in the seller’s best interests to disclose "psychological stigmas" in the seller’s disclosure…here’s why.

If the seller does not disclose in the seller disclosure, then the contract may proceed for weeks/months toward closing but the day before closing a neighbor tells the buyer about the murder. Some buyers believe in ghosts/Kharma etc. These buyers might refuse to close and the seller has lost weeks/months of valuable marketing time and the seller does not want to sue the buyers or the buyers might be "judgment proof" from lawsuits (e.g. geographically distant, poor).

If the seller does disclose in the seller disclosure, then these buyers who believe in ghosts/Kharma get weeded out early and the seller does not waste weeks/months of valuable marketing time.

Granted some buyers will not care about "psychological stigma" so disclosure protects the sellers while not creating an obstacle to closing with these buyers.

Never lie or mispresent. If asked about any psychological stigmas or any issues, one diplomatic way to handle the situation is to respond with "That is a good question. Let me write that question down and forward your question to my seller so the seller can respond."

Another consideration, the buyer will discover the psychological stigma before or after closing. Neighbors sometimes talk. People read the internet. If a buyer discovers without disclosure, the buyer may feel "tricked" even though there was no legal requirement for disclosure. Sellers and REALTORS® do not want unhappy buyers nor buyers who communicate they were tricked by the sellers and REALTORS®. Buyers now have access to broadcasting through regular media and social media and reviews.

Some lawyers have argued that any trace physical items on the property such as dried blood can take the issue out of the psychologically affected non-disclosure requirements and place the issues squarely into the environmental contamination disclosure requirements.

SECTION 27-50-90. "Psychologically affected" property disclosure exceptions.

(A) An owner is not required to disclose the fact or suspicion that a property may be or is psychologically affected, as described in subsection (B).

(B) A cause of action may not arise against an owner of real estate in a covered transaction for failure to disclose:

(1) that the subject real estate is or was occupied by an individual who was infected with a virus or other disease which has been determined by medical evidence to be highly unlikely to be transmitted through his occupancy of a dwelling place; or

(2) that the death of an occupant of a property has occurred or the manner of the death; or

(3) public information from the sex offender registry as defined in Article 7, Title 23.

(C) Subsection (B) does not preclude an action against an owner of real estate who makes intentional misrepresentations in response to direct inquiry from a purchaser or prospective purchaser with regard to psychological effects or stigmas associated with the real estate.

HISTORY: 2002 Act No. 336, Section 2.

Section 40-57-740. (A) No cause of action may arise against an owner of real estate or licensed real estate agent of a party to a transaction for failure to disclose in a transaction:

(1) that the subject real estate is or was occupied by an individual who was infected with a virus or another disease which has been determined by medical evidence as being highly unlikely to be transmitted through occupancy of a dwelling place either presently or previously occupied by the infected individual;

(2) that the death of an occupant of a property has occurred or the manner of the death;

(3) any off-site condition or hazard that does not directly impact the property being transferred; or

(4) any psychological impact that has no material impact on the physical condition of the property being transferred.

(B) Nothing in subsection (A) precludes an action against an owner of real estate or agent of the owner who makes intentional misrepresentations in response to direct inquiry from a buyer or prospective buyer with regard to psychological impacts, offsite conditions, or stigmas associated with the real estate.

Posted by : Byron King on 8/16/18 (This information is only accurate as of 8/16/18. You must contact SCR for updates and changes to this information after 8/16/18 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org)