Arizona Stigmatized Property Law
Question: In the Seller’s Property Disclosure Statement we disclosed that my mother died of a stroke in the living room of our Wickenburg home. The buyer is an investor who “flips” homes to other buyers. The buyer said that I did not have to disclose to him my mother’s death in the home, and that he will not have to disclose her death either. Is the buyer right?
Answer: Yes. Under the Arizona stigmatized property law a seller, a landlord, and any real estate agent are not required to disclose that a natural death, a suicide, or a homicide occurred in the home. Therefore, you did not have to disclose to the buyer that your mother died in your home. Additionally, a seller, landlord, and any real estate agent also do not have to disclose HIV/AIDS, sex offenders, or any crime that occurred in the home.
A. No criminal, civil or administrative action may be brought against a transferor or lessor of real property or a licensee for failing to disclose that the property being transferred or leased is or has been:
1. The site of a natural death, suicide or homicide or any other crime classified as a felony.
2. Owned or occupied by a person exposed to the human immunodeficiency virus or diagnosed as having the acquired immune deficiency syndrome or any other disease that is not known to be transmitted through common occupancy of real estate.
3. Located in the vicinity of a sex offender.
B. Failing to disclose any fact or suspicion as set forth in subsection A shall not be grounds for termination or rescission of any transaction in which real property has been or will be transferred or leased.
Note: In 2014, a court ruled that Arizona stigmatized property nondisclosures do not protect against affirmative misrepresentations. Lerner v. DMB Realty, LLC, 234 Ariz. 397, 322 P.3d 909 (Ct. App. 2014). In the Lerner case, the sellers with young children decided to sell when they discovered that there was a sex offender living next door. After listing the property, the sellers were present for a showing and were asked by the buyer Lerner (the principal in the law firm Lerner & Rowe) the reason why the sellers were moving. The sellers could have declined to answer the question, and Arizona’s stigmatized property law would have protected them from having to disclose the presence of the sex offender living next door. Instead, the sellers lied and said that they were moving to be closer to friends. The Court of Appeals ruled that although the sellers had no obligation to disclose, the sellers could not lie about their reason for moving.