In 2014, a New Jersey couple with three children purchased a $1.3 million “dream home” located in a New York City bedroom community. However, their dreams were dashed when they received the first of three supremely creepy letters just three days after closing. In the letters, an individual who calls himself “The Watcher” told the family that the property “has been the subject of my family for decades” and that he has been “put in charge of watching and waiting for its second coming.” He stated “I am pleased to know your names now and the name of the young blood you have brought to me” and inquired “Who has bedrooms facing the street? I’ll know as soon as you move in,” further asserting that “all of the windows and doors . . . allow me to watch you and track you as you move through the house.”
Understandably disturbed and worried about their safety, the family never moved into the home and claim they cannot resell it once prospective buyers learn of “the Watcher’s” correspondence. Frustrated, the family filed suit against the Sellers, Chicago Title Insurance Company, and A Absolute Escrow Settlement Company, alleging fraud and breach of contract for failure to disclose that the Sellers received a letter from “The Watcher” just over a week before the closing.
According to the National Association of Realtors, a “stigmatized” property is one that has been “psychologically impacted by an event, which occurred or was suspected to have occurred on the property, such event being one that has no physical impact of any kind.” Stigmatizing events include the death of an occupant, the occurrence of a major crime such as murder, a serious illness such as AIDs, or a belief that the house is haunted.
Although real property law has long been governed by the doctrine of caveat emptor or “let the buyer beware,” many states (including Illinois) now require sellers to make certain disclosures regarding material defects in a property. Fewer states consider purely psychological conditions to be a material defect requiring disclosure, and fewer still specifically require disclosure of psychological factors that only affect a person’s perception of a home. Even the handful of states that require disclosure for deaths occurring on a property limit disclosures to deaths occurring within a few years of the sale date.
With limited legal recourse, a buyer wishing to avoid purchasing a stigmatized property must ask questions and thoroughly investigate a property prior to closing. Even though a Seller may not be required to volunteer information about stigmatizing factors, the common law duty of good faith and fair dealing may preclude them from lying when asked a direct question. If the Seller or their agent is not forthcoming, a buyer can ask the neighbors, perform an internet search, request police records, and check city records. Although the odds of inadvertently purchasing a stigmatized home may be low, creepy situations like the case in Westfield, New Jersey demonstrate that it can pay to ask before closing.