Buyer Beware: Was Your Home Once a Crime Scene?

March 17, 2009 — -- What if your dream home was once the scene of a gruesome murder?

One Minnesota couple faced that dilemma firsthand when just days after moving into their new home neighbors told them that the previous owner had shot and killed his wife there.

Spooked and angry that the agent who sold them the house had not told them about the crime, the couple is now suing the realty company. They are seeking $100,000 for emotional distress and what they see as the decreased value of their home, according to court documents obtained by ABC News.

While this couple may benefit from a Minnesota law requiring brokers to tell buyers about crimes that have occurred in a home, not all buyers have that advantage, according to several real estate experts.

Laws concerning stigmatized properties -- the industry's term to describe homes that have been the scene of a suicide, murder, an AIDS-related death or even paranormal activity -- vary from state to state.

Experts advise that homeowners who would be opposed to living in a home that was once the scene of a violent crime do thorough research before making an offer on a property and veer away from relying on brokers to volunteer the information.

"What sellers and real estate agents have to tell buyers depends on where you are," said Ralph Holmen, the associate general counselor for the National Association of Realtors. "The general rule is that they must disclose material adverse defects, such as a chronic leak or damage to the siding of the house."

"It's a question as to whether [a murder at the home] would be considered a material or adverse defect to the property," said Holmen.