Selling haunted land? Don't spread ghost stories

Real Estate Adviser by Steve McLinden • Bankrate.com

Dear Real Estate Adviser,

My husband and I purchased a custom-built home in a small town in the Houston area in 1998 and it burned to the ground in 2004. A lot of bad things happened to the previous owners, we later came to find. After our fire, I was informed that bodies had been moved from old gravesites at the property when our subdivision was under construction. I happen to know the developer, and when I confronted him, he turned pale and said those remains weren't at the exact location our home was. My husband and I divorced shortly after our tragedy and sold the property. I am now concerned for the family that bought the property from me. Please advise me what to do.
-- M.C.

Dear M.C.,

This is a real head-scratcher, especially since there are so many moving parts to this story and no way to tangibly link these events to anything paranormal. And even with the information you provided, there are still more questions than answers. For instance, did the developer go through proper legal channels when he moved the burial ground or cemetery? Did you know of the issue before you sold? Did you or the new owner build a house on the fire site? Moreover, would the answers to these questions really matter?

What we may be dealing with here is a borderline "stigmatized property," a catchall definition for a property where an accidental death, suicide, murder, or other criminal activity occurred or where paranormal activity may have taken place.

In your case, while the facts are real, the stigma appears to be based more on unverified rumor -- even if there is an unseen force at work here. Your fire, the previous family's run of bad luck and your divorce probably aren't enough to compel you to disclose the suspected "burial ground" connection, especially post-facto -- or, perhaps I should say, ghost-facto. In fact, a lawyer might just tell you that coming forward now might plant a seed of doubt in the new owners and could potentially make you liable.

Yet, you are right to be concerned for that new family if this succession of bad events really seems to be more than just coincidental. Someone -- perhaps the same person(s) who told you about the property's history -- may eventually tell the family anyway. Of course, that might just serve to create doubt and fear in the family where there was none -- or elicit nothing more than a nervous chuckle or a shrug of the shoulders.

Stigmatized-property laws vary greatly by state, by the way, in part because stigmas relate to strongly varying perceptions, values and religious beliefs. Texas property codes don't address this type of issue. Other states say psychological stigmas are simply not material to a home transaction and allow sellers to omit their disclosure without liability. California laws, for example, say sellers and agents don't have to disclose a death -- even a murder -- that happened three or more years before the sale.

In New York, some ghostly precedent was set in the small town of Nyack, where a buyer placed earnest money on a mansion he later found to be haunted -- at least in the experience of the former owner. She had advertised it thusly to promote her bed-and-breakfast operation there, even describing various resident ghosts in detail, in local and national media reports. Because of the public statements, New York's Supreme Court ruled the buyer wasn't given all the facts during disclosure and ordered the owner to return the deposit and pay a small amount in damages.

The National Association of Realtors says, in effect, "when in doubt, disclose." (Check out the association's "Field Guide to Dealing with Stigmatized Property" at www.realtor.org for much more information and links.) In your case, it sounds as if you disclosed all the material facts. Of course, it's up to you if you want to revisit the issue.

Good luck. You're due some.