National Real Estate Exam (PSI)Property DisclosuresMedium
A buyer asks the listing agent whether anyone has died in a house the buyer is considering purchasing. The prior owner passed away from natural causes in the home two years ago. How should the agent generally respond under most state disclosure laws?
- AThe agent must disclose the death because it is always a material fact
- BThe agent must disclose the death only if the buyer is purchasing with an FHA loan
- CThe agent must disclose only if the death occurred within the last five years
- DThe agent may decline to disclose, because a death from natural causes is generally not considered a material fact requiring disclosure
Show answer & explanationAnswer & explanation
Correct answer: D. The agent may decline to disclose, because a death from natural causes is generally not considered a material fact requiring disclosure
Most states classify a death from natural causes as a non-material 'stigmatized property' fact that does not need to be voluntarily disclosed, distinguishing it from physical/legal defects affecting value or safety. Some states even provide statutory protection from liability for non-disclosure of such deaths.
Why the other options are wrong
- A. Overstates the rule; natural deaths are typically not material facts.
- B. Loan type does not determine death disclosure obligations.
- C. There is no universal five-year rule for death disclosure.
Stigmatized Property
A property that may be undesirable to buyers for psychological, not physical, reasons—such as a death or rumored haunting—generally not considered a material fact.
- Natural deaths are typically non-material
- Some states require disclosure of murder/suicide within a set timeframe
- Physical/legal defects, unlike stigma, must generally be disclosed
Memory trick: Stigma isn't structure — no duty to disclose the ghost story.