Murder/Suicide: PA Supreme Court Says Not a Material Defect
SC law labels pure psychologically affected stigma to a real property as something that is not legally required to be disclosed. (SC Code 27-50-270 and 40-57-180)
http://www.scstatehouse.gov/code/t27c050.php
http://www.scstatehouse.gov/code/t40c057.php
However to avoid upset buyers and lawsuits as occurred in PA, sellers should consider disclosing psychological stigma. While some sellers worry disclosure could negatively impact the price, the upside to seller disclosure is focusing on closing with buyers that will close even upon discovery of the stigma and avoiding post closing expensive lawsuits from buyers who get upset by psychologically affected property and lack of seller disclosure (even if not legally required). Some buyers will not care about the psychological stigma. Sellers want to focus on this group of buyers. Some buyers might even pay a premium for a psychologically affected property (haunted). Other options are to rent the property for a time period if the stigmatizing event was recent. Time can often reduce stigma.
http://www.realtor.org/legal-case-summaries/prior-murder-is-not-a-material-defect
Psychologically affected also includes fair housing issues such as HIV/AIDS individuals living in the property.
Many judges and reporters write humorously about lawsuits involving ghosts and hauntings.
Buyers who are interested in determining the psychologically affected stigma of a property should (1) ask the seller in writing specific questions (2) hire a private investigator (3) conduct their own investigation via the internet, library, interviews with neighbors and past residents.
Here is a 1996 law review article on this topic:
http://eshark.nsulaw.nova.edu/cgi/viewcontent.cgi?article=1025&context=faculty_scholarship
Posted by : Byron King