I ain't scared of no ghosts! Whether you believe in ghosts or not, you need to know what you are required to disclose about them in a listing.
Kentucky Revised Statute 324.160(4)(b) requires the disclosure of any known defects to a property. Indiana has a similar law as well. But are ghosts a defect? Prior to 2003, real estate agents in Kentucky had to determine on a case-by-case basis whether or not to disclose if a murder, suicide, death or haunting created a stigma for a property, and therefore needed to be disclosed. Now, pursuant to KRS 324.162, agents and sellers do not have to disclose those things unless the buyer asks.
In Indiana, "IC 32-21-6-5 Disclosure not required. Sec. 5. An owner or agent is not required to disclose to a transferee any knowledge of a psychologically affected property in a real estate transaction."
KRS 324.162 is Kentucky's stigmatized property law and it says you only need to disclose things required by the KRS and applicable federal law. So, what does this mean? Currently, the Indiana Code and Kentucky Revised Statutes do not require the disclosure of these stigmas, nor does federal law. So you aren't required to tell a buyer about the ghosts in the basement. (For that matter, you don't have to disclose sex offenders or troublesome neighbors either.)
Watch out, though. In the brochure, What you Need to Know about Buying and Selling Homes, issued by KREC, the Commission advised that while you are not required to disclose it, you might want to anyway. "...You must determine whether a murder, suicide, violent crime or ghost in your property has created a stigma and therefore a defect. If it is the reason that you are moving, you may want to disclose it, as that has become a stigma to you. My advice would be to disclose it anyway, as it is always better to have a knowledgeable buyer rather than one who feels duped after the closing. Buyers will find out the details of the property from neighbors or others once they move in, so it seems wise to disclose all known facts about the property."*
So, what is the moral of this ghoulish article? While they aren't required to by law, it is a good idea for sellers to disclose paranormal activity so that your clients aren't haunted by the nondisclosure later.
If there is something strange in your neighborhood...who you going to call? I guess a listing agent! Happy Halloween everyone!