Every year, especially around Halloween, I get hit with a recurring question: "Do you have to disclose if your house is haunted?" The answer isn't a straightforward one—it depends on the state. If you're interested in a deep dive into a real lawsuit that unfolded in New York, check out the Criminal podcast episode on the topic—it's a fascinating case. Now, I'm no lawyer, so don't mistake this for legal advice, but here's a breakdown of what needs to be disclosed in the state of Iowa.
In Iowa, real estate transactions are primarily operated under the principal of caveat emptor, or "buyer beware." This means that sellers are generally not obligated to disclose non-material defects, and a haunted house might be considered a non-material defect by some.
However, the Iowa courts have recognized the importance of full disclosure in certain situations. If a house has a material defect that poses a threat to the health or safety of the occupants, sellers are legally bound to disclose it. The question then becomes whether a haunting qualifies as a material defect. (and for clarification- you are not required to disclose if someone has died in your home, however if you are asked you must tell the truth.) You do however need to disclose if your home is stigmatized- The National Association of Realtors defines this as: "a property that has been psychologically impacted by an event which occurred, or was suspected to have occurred, on the property, such event being one that has no physical impact of any kind." So a mass murder in a home could definitely be considered a stigmatized property.
Material defects are typically understood as issues that can substantially affect the value or habitability of a property. While a leaky roof or faulty wiring are clear examples, the ghostly residents of a haunted house introduce a more complex evaluation.
Some argue that a haunted history could indeed be a material defect, affecting the psychological well-being and comfort of the occupants. Others contend that beliefs in the supernatural are subjective and vary from person to person, making it challenging to categorize hauntings as universally material defects. (in a nutshell.. can you PROVE it? Last I checked, catching ghosts on camera is a little tricky.)
Beyond legal obligations, there are ethical considerations when it comes to disclosing a haunted history. Many argue that honesty is the best policy, and potential buyers have a right to know about any potential factors that might impact their decision to purchase a home. But skeptics would claim there is no need to disclose something others may not believe in and it could lower the value of your home if you do and unfairly stigmatize your property.
My advice: I always tell clients to “disclose what you know”. While sellers may not be legally obligated to disclose a haunting, they can choose to do so voluntarily. This proactive approach not only fosters transparency but also helps build trust between buyers and sellers.