Is a seller or a real estate agent required to disclose that a home is the site of a suicide or homicide?
Believe it or not, these are questions that are asked of the attorneys at GRIFFITH LAW GROUP LLC at least a couple times each year. Many people think that the law requires a landlord, property manager or seller to reveal that a home or rental unit qualifies as a “psychologically affected property.” Often, a buyer will ask or demand that a seller terminate a purchase agreement, because, after signing the purchase agreement or even after the closing, the buyer discovers that someone was murdered or committed suicide in the home. Fortunately, there is an Indiana statute that addresses the issue.
Under Indiana law, “psychologically affected property” includes real estate or a dwelling that is for sale, rent, or lease and to which one (1) or more of the following facts or a reasonable suspicion of facts apply:
- That an occupant of the property was afflicted with or died from a disease related to the human immunodeficiency virus (HIV).
- That an individual died on the property.
- That the property was the site of:
- a felony under Indiana Code Title 35;
- criminal gang (as defined in Indiana Code Section 35-45-9-1) activity;
- the discharge of a firearm involving a law enforcement officer while engaged in the officer’s official duties; or
- the illegal manufacture or distribution of a controlled substance.
Indiana law further provides that:
- An owner or agent is not required to disclose to a transferee any knowledge of a psychologically affected property in a real estate transaction, and
- An owner or agent is not liable for the refusal to disclose to a transferee:
- that a dwelling or real estate is a psychologically affected property; or
- details concerning the psychologically affected nature of the dwelling or real estate.
However, an owner or agent may not intentionally misrepresent a fact concerning a psychologically affected property in response to a direct inquiry from a transferee.
In other words, the rules governing “psychologically affected property” are as follows:
- Sellers and landlords do not have a duty to reveal that a home is a “psychologically affected property.”
- Sellers and landlords cannot be held liable for failing voluntarily to reveal that a home is a “psychologically affected property.”
- If asked, sellers and landlords must truthfully answer questions about known facts about a home that might be a “psychologically affected property.”
This statute does not apply to other conditions of a property that might impacts its value, such as soil contamination, flooding basements, leaking roofs, etc. Common law fraud rules still apply to such matters. In a future article, we will explore more common fraud claims based on the condition of a home or rental unit.