In real estate, a "stigma" is a non-physical, intangible attribute of a property that can have a negative effect on the value or the sale of a property. While the Real Estate and Business Brokers Act, 2002 (REBBA 2002) does not define "stigma," some examples might include:
- The property was used in the ongoing commission of a crime;
- A murder or suicide occurred at the property;
- The property was previously owned by a notorious individual such as an organized crime leader, or known murderer;
- There are reports that the property is haunted;
- A former grow-op (an indoor illegal marijuana growing operation).
Buyers must protect their own interests by doing a lot of research and asking questions from their real estate agents, and sellers. It helps to research online about the subject property. One of the better safeguards against stigmatized property is including written legal representations and warranties in the Agreement of Purchase and Sale. For example, the APS could confirm that the property was not:
- Murder Scene;
- Previously occupied by a sex offender, member of organized crime, or a serial killer;
- Used for criminal activities such as gangs, or drug manufacture;
- Haunted or subject to paranormal reports.
Other issues including getting a mortgage: It can be a no-go from “A” lenders. These are partly because they know that that property can be harder to sell in the future. Buyers and Sellers should always seek advice from professional legal counsel on stigmatized properties to best protect their interest in the transaction.
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