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Monday, July 02, 2007

Ind. Law - "Woman didn't know rental house was murder scene" [Updated]

Dione Waugh of the Fort Wayne Journal Gazette has a story today about the new tenants of a house that had been the scene of multiple murders. Some quotes:

Earneshia Mitchell first thought the long, one-story house with blue siding on South Calhoun Street was cute and cozy.

For $550 a month in rent, the three-bedroom, 2 1/2 -bathroom home was a good deal for her and her two sons.

In March, she moved in.

Two months later, she learned Simon Rios was the previous owner and lived there until he was arrested on charges he killed his wife and three young daughters inside. * * *

Mitchell feels foolish for moving into the house without knowing its history. She never would have moved in if she had.

“I needed somewhere to stay,” she said. “My kids needed a place to lay their heads.”

State law does not require an agent to tell a prospective homebuyer or renter if a death occurred in the house unless the agent is specifically asked. Mitchell said her parents thought the house was the site of one of the city’s most gruesome homicides in recent years, but when she asked her landlord whether anything had happened in the house, she said he said no. * * *

Since Mitchell discovered her home’s history, she’s noticed several people driving by who slow down and look at her house.

“They ride by real slow and they’re thinking, ‘I can’t believe somebody lives in that house,’ ” she said. “I feel stupid. I made a mistake, but I needed somewhere to live.”

Though she never would have moved into the house if she had known it was Rios’, Mitchell said she’s not sure she’ll move out when her six-month lease is up in August.

She doesn’t stay in the house alone, she said, and is grateful that her family often drops by because it keeps her from thinking about the killings.

“I look at all the dents in the walls and the doors and I wonder if that was her trying to get out and save her kids’ lives or something,” Mitchell said.

She paused as she turned her head and looked around the home. “It’s a nice house, though.”

Funny, the ILB thought Indiana did have a law re stigmatized property, but if it exists, the ILB hasn't found it.

Here is a great article from the Aug. 7, 2006 WSJ headlined "Scenes of a Crime: Do Homes Associated With Scandal Sell?" Some quotes:

Real-estate professionals call homes tainted by murder, sex scandals or messy divorce "stigmatized properties." While they make up a sliver of the market, they have been the subject of academic research, provided fodder for lawsuits and posed a challenge for brokers. State real-estate agent and appraisal groups regularly include the subject in seminars, and the National Association of Realtors publishes a "Field Guide to Dealing with Stigmatized Property," offering insights on everything from how to market and sell stigmatized homes to dealing with buyer reluctance to own them. One scandal-dampening suggestion from the guide's "tool kit": Enhance the home's facade by painting it or replanting shrubs and flowers.

There are different degrees of stigma, of course. Appraisers and brokers say murder -- in particular, multiple homicides and cult killings -- is by far the toughest kind of notoriety to minimize. Suicides and hauntings come next, followed by illicit sex and celebrity infidelities. When bold-face names aren't involved, hanky-panky appears to have little impact. "If real-estate values were hurt for every house where the owners were unfaithful, we'd have a fire sale out here," says Steven Gaines of East Hampton, N.Y., author of 1999's "Philistines at the Hedgerow: Passion and Property in the Hamptons." * * *

Highly stigmatizing events can cut as much as 15% to 25% from the price a home would otherwise fetch, according to appraisers who specialize in such homes. The largest markdowns, they say, are associated with explosive scandals that receive broad media attention. After two or three years, the stigma begins to diminish. "Time passes, people forget," says Frank Harrison, an appraiser in Woodstock, Ill., who has researched and appraised dozens of affected properties.

From USAToday, dated Aug. 7, 2006, a story with a chart listing locations with notorious crimes and their status today. A quote:
Buyers have plenty of reasons to shun such properties, says Park Dietz, a forensic psychiatrist who testified in the trials of serial killers Jeffrey Dahmer and Joel Rifkin. "People are superstitious. They're afraid of bad luck or ghosts, or that the house is cursed," says Dietz, who has visited dozens of crime scenes and investigated hundreds more through videos and photos. "Or they have a more rational concern that the tragedies will be more salient to them. It may be on their consciousness and decrease their joy in living."

Randall Bell, author of an upcoming book on real estate called Bottom Line Results, has a name for what Dietz describes. Bell calls it "crime scene stigma," which he defines as "the reluctance on the part of the real estate market to pay full price for a property associated with a horrific crime."

A story dated June 9, 2007 in the Toronto Star is headlined "Should vendor disclose a property's past?" Some quotes:
Does Ontario need a law requiring real estate agents or sellers to disclose whether a home being sold has a history of violence?

The question arises in the wake of the publicity surrounding the sale of a house in rural Lake County, Fla., last month. On May 5, when John and Kathy Johnson and their 24-year old daughter Christina began to move into the $227,000 house they had just bought, they were shocked to learn from a neighbour that the Greenbrier St. residence was the scene of a grisly triple murder and suicide.

Back in February 2006, local police officer Michael Mount shot his estranged wife Kim, fellow officer Joe Gomez and Gomez's wife Serena in a jealous rage, before turning the gun on himself.

Six-year old Justin Gomez inherited the house. His maternal grandmother, Debra James, represented the estates of her daughter and son-in-law. She listed the house with Larry Beard, owner of Beard Pippin Properties Inc.

James specifically instructed Beard not to reveal details of the murders and suicide to potential buyers. A Florida state law allows real estate companies to withhold details about a house if they would tend to stigmatize the property. [emphasis added by ILB]

That law says that the fact that a property was the site of a homicide, suicide or death is not a material fact that must be disclosed in a real estate transaction. * * *

Events such as homicides, suicides and deaths, or even the allegation that a house is haunted have been known to affect the value of a property.

The National Association of Realtors in the U.S. requires its members to reveal all material factors that might affect the desirability of a house, but psychological factors are a grey area.

In a study published in 2000, James Larsen, a professor at Wright State University in Ohio, surveyed more than 100 stigmatized houses, including those associated with murders, sex scandals, suicides and hauntings.

Ohio does not have a law requiring disclosure of real estate stigmas, and Larsen discovered that disclosure practices varied widely. More than one-third of the surveyed brokers disclosed relevant information to all potential purchasers, but 19 per cent never disclosed the information at all.

Larsen's study concluded that stigmatized homes sold for just 3 per cent less than those not associated with scandal or violence, but stayed on the market for 45 per cent longer than average.

American law books are filled with reports of cases involving the lack of disclosure of property stigmas. Typically, the vendors and the real estate agents get sued by unhappy buyers. About half of the U.S. states have disclosure laws, and the other half do not.

[Updated 5:40 pm] Thanks to Doug Masson of the blog of the same name, we have an answer. It turns out Indiana does have a law on point, IC 32-21-6, "Psychologically Affected Properties," passed in 2002. It appears to be like the Florida law, referenced above. Some provisions of the Indiana law:
IC 32-21-6-5 Disclosure not required
Sec. 5. An owner or agent is not required to disclose to a transferee any knowledge of a psychologically affected property in a real estate transaction.

IC 32-21-6-6 Refusal to disclose; misrepresentation

Sec. 6. An owner or agent is not liable for the refusal to disclose to a transferee:
(1) that a dwelling or real estate is a psychologically affected property; or
(2) 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.

Posted by Marcia Oddi on July 2, 2007 03:34 PM
Posted to Indiana Law