Last Monday I wrote The Case of the Cursing Neighbor and I promised to tell "the rest of the story" after giving you time to ponder it. If you remember, an agent had listed a home next door to an obnoxious neighbor. This neighbor would come out in the yard, naked, cursing her neighbors whenever they were outside.
Tricia Jumonville had an excellent question regarding this story. She wondered if the neighbor had a mental condition and was thus protected under Fair Housing. In reading the court case, this bit of information was not revealed so I can't answer Tricia's question but I can tell you how the sale was resolved.
The seller and the listing agent were tired of losing buyers because of the neighbor so they created a system. When there was to be a showing on the home, the agent would call the seller and find out if the cursing neighbor was home or not. If the coast was clear, the agent would schedule the showing. In that way, a nice couple purchased the home unaware of their new neighbor's propensities.
When the couple went out to do their lawn work, the neighbor came out and did her thing. The couple promptly talked to their neighbor on the other side and asked him what was the deal? He went on to explain, as neighbors are wont to do, that this lady had been doing this for years and it was one of the reasons that their home had been put on the market by the previous owner.
The couple called everybody they knew and eventually ended up suing the seller and the listing agent for failing to disclose this particular stigma about the property. The California courts agreed with the buyer and forced the seller and the listing agent to buy back the home, allowing the couple to move on without the neighbor.
Regarding disclosure, the law is black and white on a number of issues, e.g., Fair Housing. On other issues, the only guidelines are court cases, which are much harder to quantify. And, finally, there are the unique day-to-day issues that arise such as the cursing neighbor. These last two categories are what I call a "broker's call." Since you and your broker will have liability, there should be a discussion of the issues as to whether a suspected stigma should be disclosed or not and what are the ramifications of that disclosure. This discussion will have to weigh the benefits and the detriments to both the seller and the buyer as well as the risk to the brokerage.
And they wonder why we make the "big money."