Real estate disclosure laws: a mixed bag for crimes, perceived hazards

Should 'known crimes' return to seller disclosure forms?

We once bought a large family home in Seattle’s Madrona neighborhood where a woman shot and killed her husband in front of the living room fireplace.

Should we have been told of the crime before buying? Had other activities been carried on there that might have influenced our decision to purchase?

In a recent column, we discussed the evolution of the Seller Disclosure Statement for Improved Property (commonly known as Form 17) in the state of Washington, and how it now addresses only the known condition of the structure and its systems. But to what extent should the property’s known history, or stigma, be included?

The original intent of Form 17 was to provide the seller a reminder to state any known shortcomings of the structure and systems. It also was a move to help protect sellers and agents from lawsuits. Questions on the form are about basic sewage, heating, repairs, termites and boundaries. Problems found and then fixed do not have to be listed.

Longtime residents of Madrona still refer to our former home as "Big John’s House." The Johnstons down the street occupied "The Bird Lady’s House." Another family lived in "The Crash House" because so many cars ended up in its driveway after underestimating a steep, downhill turn.

Although Big John (who was shot and killed in his home) and the Bird Lady vacated their respective homes years ago (The Crash House could not be moved), their reputations and lifestyles could affect the future market value of both residences. That’s why, when both families sold, we noted the backgrounds of our homes on Form 17.

In our case, we felt it was mandatory. In those days, the form asked for any known "crimes of violence" on the property, suicide, or death from other than natural causes. The Johnstons did so because they did not want to be sued "for having a buzzard’s nest in the attic." The Bird Lady once permitted birds (and many other flying and crawling creatures) to nest in her house.

According to Form 17, the bird activities did not have to be mentioned by the seller. (Some of our neighbors thought as many, or more, buyers would want to know about the birds, etc., in the house.)

And how do you quantify this? Just exactly how much did these experiences hurt the value of the homes?

We did not know Big John had been killed in the house before we bought it. It would not have made a difference in our decision to buy. (However, when we did find out, we drafted a Jesuit to conduct a sort of exorcism — without piano music — in the home.)

Although Form 17 is only an attempt to inform and disclose, there are no more questions about crime and death. They were ruled out before the disclosure statement became state law. "Stigma" was never really stated, even though it’s been an elephant in the room in more than a few residential sales.

The only new considerations for Form 17 have been environmental. According to Chris Osborn, attorney for the Northwest Multiple Listing Service, a mention of carbon monoxide detectors will be included in the form’s next revision.

There’s a huge movement to identify health hazards resulting from dangerous materials. It’s obviously important to identify and disclose, but the larger problem has been people’s perception of a hazard. Once they perceive something to be a health hazard, they don’t want anything to do with it.

For example, some older homes still have sprayed "popcorn" acoustical ceilings containing "chrysotile," the most common form of asbestos in residential construction. Asbestos also was used to insulate domestic furnaces and pipes. Asbestos fibers are most harmful when they are disturbed and enter the air.

However, there are some people who would rather not deal with a house that has a popcorn ceiling. It’s not just about the cost to remove it; they simply don’t want to live with the thought of it being in the home.

The same might be said about a property that has experienced a crime. Some people would rather not live with any negative "vibe" and choose another house. The question then is: "How are they to know?"

Tom Kelly’s new e-book, "Bargains Beyond the Border: Get Past the Blood and Drugs: Mexico’s Lower Cost of Living Can Avert a Tearful Retirement," is available online at Apple’s iBookstore, Amazon.com, Sony’s Reader Store, Barnes & Noble, Kobo, Diesel eBook Store, and Google Editions. 

                                         

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