Q: I found out that the son of the owner we purchased a property from 6 weeks ago hung himself in the attached garage. Shouldn’t the agent have told us about this suicide? We live in Michigan.
A: Properties where murders, suicides and even cases of AIDS have been reported (among other things--including paranormal activity) are often referred to as "stigmatized." (Note: According to Realtor Anita Clark, HIV patients are identified as disabled according to the Americans with Disabilities Act and are now protected from discrimination under the Federal Housing Act. Disclosing a person has AIDS is breaking the law.)
Disclosure of such items is dependent upon state law rather than federal law. As you might expect, laws differ greatly from state to state. Some states have no laws at all regarding the disclosure of stigmatized properties.
Michigan law regarding stigmatized properties is unclear and doesn't seem to require disclosure of a property's flaws or issues beyond its physical condition.
According to a 2006 report from the Michigan Bar Journal on stigmatized property law, Evelyn Williams wrote, “Some states have enacted laws, known as stigma disclosure statutes, regarding the disclosure of psychological facts, but Michigan has not. In those states that have enacted stigma disclosure statutes, there are no hard and fast rules about disclosing property stigmas, and disclosure laws vary from state to state. In Michigan, the Seller Disclosure Act2 provides the mandatory guidelines for disclosures. But the language in the form required under Michigan’s Seller Disclosure Act suggests that residential sellers are not required to disclose information about the property beyond its physical condition. In spite of this, many buyers feel that residential sellers should disclose any and all information concerning the property, including stigmas. Without a clear and definite law addressing this matter, the question remains whether Michigan residential sellers have a duty to disclose stigmas associated with the real property.
"This author [Williams] suggests that in Michigan, on the basis of recent court decisions and Michigan statutes, residential sellers and their agents have no duty to disclose stigmas associated with the real property involved in the transaction."
(We could not find any information by searching Michigan.gov, but you might give that a shot as well.)
A home’s horrible history
To learn more, you should read "Horrible history of a home may be hidden from buyers." For the most part, you'll need to check with the real estate commission in your state to determine what is required to be disclosed and whether or not you'll need to specifically ask before signing a contract for a home you are interested in purchasing.
A 25-year expert observer of the mortgage and consumer debt markets, Keith Gumbinger has been cited in thousands of articles covering a wide range of consumer finance and economic topics in outlets ranging from the Wall Street Journal to the Bottom Line newsletters. He has been a featured guest on national broadcasts for CNN, CNBC, ABC, CBS and NBC television networks and has been heard on NPR and other national and local radio programs. Keith is the primary researcher and writer for HSH.com's MarketTrends newsletter and has authored or co-authored a number of consumer guides on mortgages, home equity, refinancing and more.