Before buying a property, it’s a good idea to act like it’s a potentially terrifying first date you just set up online. If you’ve ever done online dating, you understand what it’s like to act casual about setting up a first date with someone exciting, while simultaneously tracking down every last piece of publicly available information on them to make sure they’re not an awful person.
A friend of mine was going to make an offer on an adorable cottage minutes from downtown near a beautiful forest and a babbling brook. Just for fun, I found information on the previous owners of the property, and on the history of the properties surrounding it. After doing some casual online stalking, I stumbled across an interview with the previous owner in the local newspaper. The owner was interviewed because the nearby babbling brook had become a rushing river and flooded the entire house and neighboring properties, causing hundreds of thousands of dollars in damage. Of course, none of this was mentioned in the listing, and I wonder if it would have been mentioned in the seller disclosures.
Another form of online background checking is useful for condominiums. I’ve been able to find out quite a bit about condos that seem a little too cheap by looking at all the current and expired listings from other units in the same building. I know I’ve struck gold when a listing for the same building says something like “$900,000 special assessment almost paid off!” I’ve even found ones that say “Massive building repairs almost complete–great time to buy!” It’s definitely helpful to find out that there have been recent, serious, and expensive problems with the building before buying.
Even if there’s no nefarious intent on the part of the seller, certain things about a property do not have to be disclosed. For example, if there was a death on the property, or if the property was the site of a violent crime, these facts do not always have to be disclosed in certain states. However, most people do not want to move into their new home, and then have neighbors say “Wow, so you’re the one who bought the old murder house!” It’s easy to think ghosts are ridiculous until you learn that the previous owners of the house you’re about to purchase moved out because they couldn’t stand how haunted it was. To continue believing that ghosts aren’t real, you might want to avoid purchasing that home.
It’s not just that you don’t have to mention certain things about a property–it is in fact against the law to disclose certain things about a property that are not material facts. Thus, it’s not a good idea to encourage a seller to just disclose everything that’s ever happened in their house. However, if you are purchasing a home, it’s a great idea to type the address into Google and see if any news stories pop up. Researching the neighboring homes on Google isn’t a bad idea either.
There’s a huge, gorgeous mansion in my neighborhood that caught fire and almost entirely burned down six years ago. It was painstakingly restored, and then a year later burned down a second time, and all the newspaper said was that this time there was “a body found in it.” To this day, no one knows what happened or who was in the house; the only thing that’s known is that the owners were out of town for both fires. None of this means that this would be a bad house to purchase necessarily, but I would definitely want to find out about these fires before purchase rather than after.
If you are buying or selling a house, it’s important to know what does not have to be disclosed, what cannot be disclosed, and what must be disclosed. These can be very different depending on which state you live in. Do not assume that everything must be disclosed–there are a lot of subtleties to disclosure. Material facts must be disclosed, but material facts are different between states. For example, in Maryland, a homicide on a property is not a material fact, so it does not need to be disclosed (Real Property Article, Annotated Code of Maryland, Section 2-120). If the seller’s agent decided to disclose a homicide on the property in Maryland, and the seller did not want this to be disclosed, the agent could be found in violation of their fiduciary duties to their seller. I wrote about this in a previous article if you want more information.
If you’re the type of person who thinks that facts are facts, and facts are black and white, you definitely should check the disclosure laws in your state to find out what is considered a material fact, and what is not. A fact’s location can matter more than the fact itself.
My overall advice is to treat every potential home purchase like a charming, potentially awful person you’ve just met online; enjoy chatting with them in the app while you’re running background checks in your browser window.
