by Marilyn E. Tomei, Associate Legal Counsel
With increasing frequency, the Commission's legal staff receives questions about the marketing of stigmatized properties. By definition, a 'stigmatized property" is one which buyers or tenants may shun for reasons which are unrelated to its physical condition or features.
The questions below -followed by responses from the legal staff - represent a sampling of those asked by licensees:
Q: I am a licensed broker. The seller of a property I have listed is the executor of his brother's estate. The brother resided in the house and was killed there. The seller/executor doesn't want me to tell prospective buyers about the circumstances of his brother's death. Yet, I know I have a duty to disclose all material facts about the property. Can I withhold this information from prospective buyers?
A: N.C.G.S. ~ 39-50 states, "In offering real property for sale, it shall not be deemed a material fact that the real property was occupied previously by a person who died or had a serious illness while occupying the property..." The statute goes on to say, however, that the seller may not "knowingly make a false statement concerning such past occupancy." (This law also applies to agents of sellers as well.)
Thus, you need not volunteer information to a prospective buyer about the previous occupant's death. But, if you are asked a direct question (such as, "How did the previous owner die?"), you must answer truthfully.
Q: What if the executor wants me to find a tenant to rent the property, rather than a buyer for it?
A: The same rule applies. Pursuant to N.C.G.S. ~ 42-14.2, the death or serious illness of a previous occupant is not a material fact. Therefore, unless they ask, you need not tell prospective tenants that a death occurred in the property.
Q: What if the executor's brother died of AIDS?
A: A death due to AIDS (Acquired Immune Deficiency Syndrome) is treated differently. The federal government considers people with AIDS to be handicapped, and as such, they are protected under the federal fair housing laws from discrimination in housing transactions.
Consequently, if you are asked by a prospective buyer or tenant whether the previous occupant of the property had AIDS, you should treat it just as you would a question about the person's race, religion, or nationality by answering that it is against the law for you to respond to the question or to discuss such issues.
CAVEAT: The time to define legal obligations m a transaction involving a stigmatized property is in the beginning. If you and your principal discuss these issues at the time the listing is taken or the property management agreement is entered into, the property owner is less likely to be unpleasantly surprised later on in the transaction.