A common question around Halloween usually involves whether listing brokers must disclose the history of stigmatized properties, whether that history includes ghosts, violent crimes or death.
Betsy Urbance, Illinois REALTORS® General Counsel and Vice President of Legal Services, cites the Illinois Real Estate License Act, Section 15-20, saying licensees have no legal duty to disclose facts that have no direct and detrimental physical impact on the property.
“Stigmas are subjective,” Urbance says. “What is a problem for one buyer might not be an issue for another buyer. Listing brokers and sellers of Illinois real estate do not have a legal duty to disclose a stigma, such as the fact that the house was the site of a violent crime. It is worth noting that real estate brokers do have a duty to be honest. Thus, if asked the question, the broker could answer honestly if permitted by his seller client, or if the information has been otherwise published. If the seller client does not permit disclosure, the broker must answer honestly that he is not permitted to disclose or discuss. They would not have a legal duty to disclose that someone believes the house is haunted.”
“The listing broker’s company might have a policy that would prohibit dual agency in a situation where the property might be stigmatized. If the buyer broker has ‘actual knowledge’ of the stigma, the buyer broker should disclose to his client or send the client to published sources of information. Keep in mind that no licensee can legally disclose that an occupant was afflicted with HIV or any other medical condition,” she says. “To do this would be a discrimination issue.”
“Finally, depending on the situation and as a practical matter, sellers might elect to disclose a stigma even if there is no legal duty. The reason a seller might instruct his broker to disclose is in order to ‘trump’ the neighbors. The neighbors always tell. There is no exception to that rule (stated only slightly sarcastically).”