Psychologically Impacted or Stigmatized Homes

When listing a home with a real estate agent, sellers of psychologically impacted or “stigmatized” homes often ask if a seller needs to disclose a something such as a murder or suicide occurring on the property. The answer is not the same across all states, but luckily, in Colorado, we have some guidance from the legislature. The legislation is found in C.R.S. 38-35.5-101 clarifying the answer and is shown below:

“C.R.S 38-35.5-101 Circumstances psychologically impacting real property–no duty for broker or salesperson to disclose.

(1) Facts or suspicions regarding circumstances occurring on a parcel of property which could psychologically impact or stigmatize such property are not material facts subject to a disclosure requirement in a real estate transaction. Such facts or suspicions include, but are not limited to, the following:

(a) That an occupant of real property is, or was at any time suspected to be, infected or has been infected with human immunodeficiency virus (HIV) or diagnosed with acquired immune deficiency syndrome (AIDS), or any other disease which has been determined by medical evidence to be highly unlikely to be transmitted through the occupancy of a dwelling place; or

(b) That the property was the site of a homicide or other felony or of a suicide.

(2) No cause of action shall arise against a real estate broker or salesperson for failing to disclose such circumstance occurring on the property which might psychologically impact or stigmatize such property.”

Bottom line, according to the legislation, such information does not have to be disclosed. But can it be disclosed?  Yes, it can. This is a discussion that needs to happen between the seller, real estate broker and a real estate attorney. If the decision is made to disclose, a real estate broker should have that permission in writing from the seller to do so. After all, practically speaking, it is unlikely such an event will remain a secret from the buyer. The day the buyer moves in, neighbors are usually anxious to share lots of information.

If a home is listed by a REALTOR® — or a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics — and not just a licensed agent, what does the REALTOR® Code of Ethics say? It states in Article 2:

“REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. REALTORS® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law.

Standard of Practice 2.5 further states:

Factors defined as “non-material” by law or regulation or which are expressly referenced in law or regulation as not being subject to disclosure are considered not “pertinent” for purposes of Article 2.

As explained above, in the state of Colorado, there is legislation stating a murder or suicide is a not material fact. Therefore, non-disclosure would not be a violation of the REALTOR® Code of Ethics Article 2.

As always, consult with your REALTOR® and real estate attorney for any matters such as these for your personal situation.

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