Stigmatized Properties – Disclosure of Certain Stigmas

September 9, 2020

- By The MAR Legal Team

REALTORS® are required by Massachusetts law (Chapter 93A) to disclose known physical defects to prospective buyers. This obligation clearly applies to defects such as a leaky roof or a faulty foundation. Often, there are questions about whether REALTORS® need to also disclose things that may have a psychological impact on the property: murders, suicides, paranormal phenomenon, and other psychological stigmas.

In 1998, Massachusetts enacted the Stigmatized Property Law (Chapter 93, Section 114). This statute specifically states that brokers do not have a duty to investigate or affirmatively disclose murders, suicides, allegations of ghosts, or other possible stigmas. As with other inquiries from prospective buyers, a REALTOR® must answer the question relating to the stigma honestly and to the best of their knowledge. REALTORS® do not have a duty to investigate stigmas, even if specifically asked about them by prospective buyers. If the answer is unknown, or additional information is requested, the REALTOR® should direct the prospective buyer to the appropriate source of the information.

REALTORS® must also be cognizant of questions that involve protected classes under the Fair Housing Act. While the Stigmatized Property Law addresses disclosure of crimes that may have occurred within the bounds of the property, buyers often inquire about crime in the neighborhood. REALTORS® must be careful to avoid steering buyers away from certain neighborhoods, as this would likely violate the Fair Housing Act. If faced with this situation, the REALTOR® should explain that the question implicates fair housing and direct the prospective buyer to the local police department.

Similarly, REALTORS® should exercise caution when facing questions related to whether a previous occupant was diagnosed with COVID-19. The Stigmatized Property Law does not require disclosure of diseases that are unlikely to be transmitted through occupancy. Furthermore, while it remains a novel question, the National Association of REALTORS® recommends treating COVID-19 as a disability protected by the Fair Housing Act, meaning that disclosure of an individual’s diagnosis of COVID-19 without their consent may violate federal disability protections.

Massachusetts largely follows the doctrine of caveat emptor – or buyer beware – when it comes to buying and selling real estate. The required disclosures are fairly limited under the existing statutory framework. In representing buyer clients, REALTORS® should determine what information is important to their client and ensure that appropriate questions are asked of the seller to enable the buyer to make an informed decision.