Murder’s Effect on Property Value

In a May 30 question posed to Robert Bruss, “Murder in Condo Isn’t Enough Reason for Buyer to Bail Out,” a reader described a situation where he or she committed to buy a condominium, where the tenant-occupant subsequently stabbed an acquaintance to death in the unit prior to close of escrow.

The prospective buyer is uncomfortable consummating the transaction knowing that a violent murder was committed on the premises, and desires to cancel the purchase contract.

Bruss suggests that if the unit is painted, recarpeted and otherwise restored to original condition, there is no legal basis for cancellation of the contract, since “the effect of a death in a residence on its market value is unclear.”

A landmark California appellate case, Reed vs. King (145 Cal.App.3d 261, 193 Cal.Rptr. 130), involved acquisition of a residence where a multiple murder was committed several years before, but was not disclosed to the buyer.

The court ruled that there was indeed a duty to disclose this fact, noting that “reputation and history can have a significant effect on the value of realty.”

Recent well-known instances of crime scene stigma include the Menendez home, Nicole Brown Simpson’s condo and the Heaven’s Gate mansion.

By advising the buyer to go ahead with the transaction as if nothing happened, I fear Bruss is doing the reader a disservice. This tragic event will subsequently require disclosure, and the new owner may be left holding the bag for any market discount associated with such disclosure.

MICHAEL V. SANDERS

Coastline Realty Advisors