Knockin’ on Heaven’s Door: Stigmatized Properties

‘…that long black cloud is comin’ down,
I feel like I’m knockin’ on heaven’s door…’  Bob Dylan

Listen to the podcast version of this article by clicking on the ‘play’ button below.

Every experienced Realtor has them: Stories rarely shared with clients that involve particularly unnerving moments in an agent’s real estate career.  And, for purposes of this article, we aren’t talking about simple cases of a flea-infested house, or one with no water or electricity. The topic? Stigmatized properties. 

Not all stigmatized properties are obvious, especially at first

Not all stigmatized properties are obvious from the outside

Stories of stigmatized properties are often unforgettable to the real estate agent and their clients who experienced them. Also known as ‘tainted’ real estate and many other monikers, before we dive in, let’s get a quick grasp of what a stigmatized property is.

Definition of Stigmatize
‘Here’s a dictionary definition of the word stigmatize: 

Stigmatize verb
1. to set some mark of disgrace or infamy upon

While this definition may be readily grasped, state laws vary significantly in how they address stigmatized property. This is not a legal analysis, but in Oregon under the broadest sense of the term, it’s commonly understood that a stigmatized property can range from one where there are problems, like mold, to being a place where undesirable things have occurred, such as a crime. So it’s important to realize that there are degrees of stigma. And what may bother one person may not seem so bad to another.

Oregon Real Estate

Meth houses are one category of stigmatized property

It’s important to understand that one of the classic examples of stigmatized property is a home where tragedy or other undesirable activity has occurred, such as if someone dies inside a house. Another example is a home where drugs like methamphetamine have been manufactured. Yet other example, though generally considered less worrisome to many buyers, is a foreclosed home where a former owner loses the property due to job loss.

Willamette Valley Properties

This Happened to Me: A Case Study
Here’s a true story that helps to illustrate the impact of stigmatized property. While at work one day, I received a phone call and quickly recognized the caller as a client I assisted with a home purchase months earlier. Listening further, I detected serious concern in his voice as I’d never observed from him before.

As the client talked, I listened while automatically running through a brief mental checklist of his closed transaction:

‘Paperwork completed correctly?’  Check.
‘Home inspection performed?’ Check.
‘All inspection issues addressed or negotiated?’  Check.
‘Building permits researched?’ Check.

‘Insurance, title report, loan and closing documents taken care of?’  Check.

I run through a few more items in my mind, then hear him say the word ‘Ghost.’ 

Oregon Real Estate Podcast

In ‘A Christmas Carol,’ Scrooge is visited by the ghost of his business partner, Jacob Marley

In the Beginning
After looking at many homes, this buyer and his wife ended up making an offer that had some ‘back and forth’ on the price, but it was ultimately accepted. Looking back at the transaction, there was never any indication to suggest this would be anything but a ‘normal’ home purchase. And everything was normal. Until after the transaction closed. Which is when things took a decidedly different turn.

Not very long after this buyer and his wife moved into their recently purchased home, they began to hear strange noises, usually in the middle of the night, like around 2 or 3 AM. But then things got much stranger.

The sounds they heard appeared to emanate from inside the house for no readily explainable reason. Sounds like dropped tableware, moving furniture, bells ringing. You get the idea. There was no reason for them to expect these sounds, yet they were apparently coming from inside the house and at odd hours.

After a while of having their sleep disturbed, the homebuyers grew concerned and began to ask around the neighborhood. “Do you hear strange sounds at night like we do?” After being told “No” by at least one neighbor, one neighbor asked if the homebuyers knew about the event that had occurred inside their home. The new owner said ‘No.’

Story specifics vary, but the neighbor apparently explained that a child had died inside the house and was then laid to rest on the property. Understandably, this distressed the home buyers, who thought they should have been told before buying the home.

After speaking with the home buyers, I next called the seller’s real estate agent for the transaction and simply asked: “Did you know that the property had a history of a death in the house? “Yes,” he quickly answered, then followed up with what I knew aligned with what Oregon real estate agents are instructed regarding state real estate law. “But my principal broker told me we didn’t have to disclose it.” And he was correct.

I also understood that particular Realtor’s fiduciary responsibility to his seller client; Because if the seller’s agent had openly revealed the situation while marketing it, there was a good chance the property would have sold for considerably less. Usually, the rule is ‘disclose, even if an item seems trivial.’ Yet in this instance, there was no state law requiring such disclosure and the seller had a vested interest in not bringing the issue up.

The Rest of the Story
As a result of the impact from their home purchase of the stigmatized home, the homebuyers moved and ultimately rented out the property. Witnessing this unpleasant situation had me researching to better determine what might have been done differently. At the time, there were no online resources solely dedicated to determining if a house is stigmatized. On top of that, repeated online searches eventually turned up one news story relating to the property. However, that was accomplished by a search using the specific house address and buried in a list of much other website information. It was virtually a ‘needle in a haystack.’

Oregon Real Estate-Stigmatized Property

Rules of Disclosure
Realtors are compelled to abide by real estate law. So what exactly is required by an Oregon real estate agent regarding stigmatized, or other ‘tainted’ property?  Oregon law states in Oregon Revised Statutes 93.275 the following excerpted incidents as among those considered not material to a real property transaction:

(a) The fact or suspicion that the real property or a neighboring property was the site of a death by violent crime, by suicide or by any other manner;

(b) The fact or suspicion that the real property or a neighboring property was the site of a crime, political activity, religious activity or any other act or occurrence that does not adversely affect the physical condition of or title to real property;

What’s Legal Vs. What’s Right
Was not disclosing such history the right thing to do, though? You be the judge. That’s where there is a divergence of opinion and it’s not always because someone is buying or selling a property. To some buyers, what has happened in the past within the four walls of a house, especially a death, matters. Other buyers may have a more practical perspective and and appear to be less bothered by property history.  Here is information on a court case where a buyer sued a homeseller who did not disclose stigmatizing details. As you will read there, there are two sides to the story of stigmatized properties.

Oregon Real Estate Podcast

And in an odd twist, some reports suggest properties located near a cemetery actually sell for considerably more money. As a result, there are diverse opinions on certain kinds of stigma. Take for example houses considered ‘haunted.’ A Realtor survey found that most people are open to purchasing a haunted house.

Oregon-Real-Estate

Why Stigmatized Properties Are Different
One reason stigmatized properties are different is because they don’t affect everyone the same way. Another reason is because factors that stigmatize a property vary. Some are undeniably gruesome, like violent death, while other, more common stigmatizing factors have limited psychological affect, like bank foreclosure. Yet other stigmas, such as a former meth lab, are doubly troublesome, since they carry both a market stigma plus can render a property unfinanceable.

Another reason why stigmatized properties are uniquely different than usual issues, like say dry rot or a leaky roof, is that they frequently involve very human emotions. And when we consider what makes a home, where children are raised, birthdays and anniversaries are celebrated and many cherished memories are created, common sense dictates that a house should comport with the real estate concept of ‘quiet enjoyment,’ least of all being awakened at 3 AM to later be surprised with what has occurred in your own home.

Oregon-Real-Estate
There’s a Website for That

So important is the issue of certain real estate stigmas that there are even websites for consumers to research for them. For example, homebuyers concerned about a possible death in a particular home can now search at websites like DiedInHouse.com in an effort to determine such information. However, be aware that this kind of online search may provide an incomplete portrayal of what you’re seeking.

 

Oregon Real Estate Podcast

Latin for ‘let the buyer beware.’

Buyer Beware
Websites that purport to provide a report on stigmatized real estate typically charge a fee and they are certainly not foolproof. In fact, a recent test search of several confirmed ‘death houses’ in Oregon found no record in such a website dedicated to providing this kind of information. What these websites sometimes say in their results is that they ‘do not have any records’ of specific activity. Given my anecdotal ‘test searches’ of known locations where death, violent and otherwise did occur, yet where no records were located, appears to suggest such databases may be small, rarely updated, or otherwise inadequate.

What’s A Buyer to Do?
First, understand limitations of Oregon real estate law. Certain real estate factors simply do not need to be disclosed.

Second, realize that websites claiming to provide information on stigmatized properties can be severely lacking. So if more fully determining a property’s stigmatization status is important to you, you may need to address this on your own in a variety of ways explained below. There are certain reliable websites, depending on what you’re seeking. For example here is a link to the Drug Enforcement Administration’s meth lab registry.

Third, if your Realtor, family member or friend is more ‘computer savvy’ than your are, have them perform some research. Regardless, some homebuyers may wish to work on this themselves.

Oregon Real Estate Podcast

Researching a Stigmatized Property
It’s important to realize that a great deal of data may not be on the Internet, or easily found there. Yet that’s generally a fast way to get started. So if you have concern about possibly purchasing a property and want to see if there is information to be found, here’s one possible research approach:

Perform Internet searches using different search engines (Google, Bing, among others). Each time you search, type in the property address several different ways. For example, if there are many different pages that turn up for a specific address, try enclosing the search address using closed quotes.

One example might look like this: “123 E. Main Street, Portland, OR” and also “123 East Main Street, Portland, OR” along with several other methods, including spelling out the state and possibly leaving the word ‘street’ out altogether. Try also typing in a possibly related word in your search, like “123 E. Main Street, Portland OR” followed by the word “police” or “arrest” or “murder” or “crime” or “death.” Also realize that in certain counties and towns, the street direction is used AFTER the street name. So in Salem, the address might be “123 Main Street East, Salem, OR” along with other variations.

You get the idea. What you’re trying to do is determine any especially untoward activity associated with that specific house you may purchase. Other potentially effective ways to help determine more about a specific property regarding possible stigmatization is to ask the neighbors, or your local police department. 

What’s A Seller to Do?
Usually the best advice for homesellers is to ‘Disclose, disclose, disclose.’ Yet there are exceptions. For example, in Oregon it is illegal to disclose certain facts about a property.

Under Oregon law, neither the seller nor their agent is allowed to disclose that an owner or occupant of the real property has or had human immunodeficiency virus or acquired immune deficiency syndrome.

If you’re unsure about how disclosure requirements apply to your situation, it’s generally a good idea to consult your Realtor for more information and/or an attorney specializing in real estate law.

Do you have a real estate question? Contact Oregon Realtor Roy Widing using the convenient form below.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s