The Commission frequently receives telephone calls asking how licensees should handle the sale or lease of property on which a heinous crime occurred or perhaps is said to be haunted. Textbooks generally describe such properties as "psychologically impacted." That term generally describes emotional factors rather than economic factors which may influence the decision of a prospective purchaser or tenant.
Properties that were the scene of a murder, a rape, or a suicide or that were occupied by a person with a communicable disease or by a person who has had AIDS – all are generally described as psychologically impacted. Should licensees disclose such matters? The answer is sometimes "yes" and sometimes "no."
The law requires licensees to disclose material information about a property to prospective purchasers or tenants. Generally, the courts have held that whatever is material to the buyer or tenant is, in fact, material. That means that licensees must disclose anything that affects whether the buyer would want to purchase the property or affects what the buyer is willing to pay for the property'.
When a defect is physical (for example, a leaking roof or unsound foundation), the issue is clear. Licensees must disclose. When the defect is emotion (for example, murder or ghosts), the answer varies.
The Official Code of Georgia Annotated Section 44-1-16 addresses this issue directly:
(a)(1) No cause of action shall arise against an owner of real property, a real estate broker, or any affiliated licensee of the broker for the failure to disclose in any real estate transaction the fact or suspicion that such property:
(A) Is or was occupied by a person who was infected with a virus or any other disease which has been determined by medical evidence as being highly unlikely to be transmitted through the occupancy of a dwelling place presently or previously occupied by such an infected person; or
(B) Was the site of a homicide or other felony or a suicide or a death by accidental or natural causes;
provided, however, an owner, real estate broker, or affiliated licensee of the broker shall, except as provided in paragraph (2) of this subsection, answer truthfully to the best of that person´s individual knowledge any question concerning the provisions of subparagraph (A) or (B) of this paragraph.
(2) An owner, real estate broker, or affiliated licensee of the broker shall not be required to answer any question if answering such question or providing such information is prohibited by or constitutes a violation of any federal or state law or rule or regulation, expressly including without limitation the federal Fair Housing Act as now or hereafter amended or the state´s fair housing law as set forth in Code Sections 8-3-200 through 8-3-223.
(b) No cause of action shall arise against an owner of real property, real estate broker, or affiliated licensee of the broker for the failure to disclose in any real estate transaction any information or fact which is provided or maintained or is required to be provided or maintained in accordance with Code Section 42-9-44.1. No cause of action shall arise against any real estate broker or affiliated licensee of the broker for revealing information in accordance with this Code section. Violations of this Code section shall not create liability under this Code section against any party absent a finding of fraud on the part of such party.
This “Stigmatized Property” was first adopted in 1989 (and subsequently amended in 1998 and 2001). After 1989, the federal and state fair housing laws changed to prohibit discrimination based not only on race, color, religion, sex, or national origin, but also based on familial status and handicap. Subsequent federal rulings defined handicap to include persons with AIDS.
Therefore, the Commission sought the advice of the Attorney General's office on the impact of the federal law on Georgia's "Stigmatized Property" law. The advice that it received indicates that there is a conflict between the law as it relates to diseases such as AIDS. If asked about such diseases as AIDS, a licensee "should respond by stating that he or she is unable to answer such an inquiry." Such a response is consistent with how licensees have traditionally responded to questions related to fair housing issues.
However, the Attorney General's office indicated that when a client or customer questions a licensee as to whether a property "was the site of a homicide or other felony or the site of a suicide," the licensee should "answer truthfully to the best of such [licensee's] knowledge.
Licensees must affirmatively disclose material defects in the physical condition of the property. However, they are not required to disclose whether a homicide or other felony or a suicide occurred on a property unless a prospect asks them. The key distinction is that felonies, suicides, and infectious diseases generally do not involve the physical condition of the property. Their impact on the property is psychological.
Nevertheless, sometimes the seller will make the licensee aware that such an event occurred on a property. If that occurs, the licensee should advise the seller that affirmatively disclosing the event to prospects can eliminate future problems. For example, a prospect who enters into a contract may seek to rescind the contract if he or she later learns of such an event. Disclosure at the outset reduces the negative impact of a prospect's psychological reaction to the seller's property. At the same time, it builds confidence in the agent's and seller's integrity.
The information contained in this article is believed to be current and accurate. The GREC staff reviews the contents periodically and updates it when appropriate. If you have questions or comments about this article, you may contact us at firstname.lastname@example.org . Last reviewed August, 2006.