What You Need to know About "Stigma"

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Today, let's talk about "stigma".

What it is in the context of real estate - and more importantly - what you're obligation are as a Realtor.

What is Stigma?

In real estate, a "stigma" is something about a property that can't be seen or touched but may cause a potential buyer to feel uneasy or emotional.

Basically, an event or situation may have happened in or near the property that doesn’t change how it looks or works, but some people might see it as making the property less appealing or undesirable.

Examples of Stigmas:

• A death occurring on the property, natural or otherwise.
• The property being associated with criminal activity (e.g., a former drug operation).
• A former owner with a notorious reputation.
• Rumors of the property being haunted.

What are your obligations as a Realtor?

It depends on who your client is...

Sellers:
There is no law that requires a Seller to disclose stigma voluntarily. So no, it doesn't have to be in your MLS listing. But if the Buyer makes specific inquiries, you cannot conceal the truth.

The only time where stigma would need to be disclosed upfront, is if it:

• meets the definition of a latent defect, AND
• renders the property unfit for habitation or dangerous.

See the Shai Gilgeous-Alexander case for a good example of this.

Buyers:
Buyer agents also have obligations when it comes to stigma.

If you become aware of a "material fact", you are required under TRESA to disclose it to your client and help them understand how it impacts the decision to purchase.

Now to be clear, "material fact" is defined in TRESA as: a fact that would affect a reasonable person’s decision to acquire or dispose of the interest.

In my opinion, most stigma would fall under this definition.