When selling a home, must you disclose its unsavory past?

Events that transpired in Westfield, N.J., three years ago might sound a lot like the plot of a horror film.

A couple with three young children purchased a property they said was the home of their dreams: a 3,920-square-foot house nestled in a quiet, high-income suburb 30 miles outside Manhattan. To snag it, they shelled out $1.3 million, and closed the deal in June 2014.

But, they said, three days after closing, a letter arrived — from someone claiming to be "the Watcher."

"My grandfather watched the house in the 1920s, and my father watched it in the 1960s," the letter said. "It is now my time."

In three letters Derek and Maria Broaddus said they received in summer 2014, "the Watcher" made clear his obsession with the house. In one, the writer asked whose bedroom faced the street. Another criticized them for making the home "so fancy." In another, "The Watcher" wrote, "I am pleased to know your names now and the name of the young blood you have brought me."

It is not surprising that the Broaddus family never moved into the house. Instead, they hired an investigator, sued the former owners, contending that they concealed that they also had received a letter allegedly sent by "the Watcher," and at some point attempted to sell and even demolish the house. In the end, the property did not sell, demolition permits were not approved, and the lawsuit remains open. It has even inspired a countersuit by the former owners against the Broadduses — this one, for defamation.

In the years since the Westfield home became a sensation, the story has continued to grip professional and amateur sleuths alike: Was it legitimate or a hoax?

But it has also raised a more serious question for the real estate community: When a property does have an unsavory past, must you disclose anything nefarious to potential buyers?

In the lawsuit over the Westfield home, the Broaddus family accused the former owners of fraud and concealment, contending that by not disclosing they had also received a letter from "the Watcher," they "suppressed material facts in connection with the sale of the home."

What is a "material fact," though, and what, as a seller, are you required to disclose?

In Pennsylvania and New Jersey, laws require the disclosure of only physical kinds of problems: holes, leaks, infestations, and the like. In Pennsylvania, the Real Estate Seller Disclosure Law requires that sellers disclose any "material defects" that are "known to the seller." In New Jersey, a similar law indicates sellers must make "a reasonable effort to ascertain all material information concerning the physical condition."

That's just not enough, buyers such as the Broadduses and others have argued.

In Delaware County in 2006, Thornbury Township resident Konstantinos Koumboulis shot and killed his wife before turning the gun on himself. Later that year, a couple bought their house at auction, renovated it, and sold it to a new buyer. They never disclosed the home's high-profile tragedy, and a new buyer — Janet Milliken, from out of town and unfamiliar with the news — purchased it for $610,000.

When she discovered the house's history, she sued the sellers, Joseph and Kathleen Jacono, for not disclosing the history. In 2014, the Pennsylvania Supreme Court ruled in favor of the Jaconos in Milliken vs. Jacono, specifying that psychological stigma is not a material defect.

"When you start going beyond physical defects, it's hard to figure out what effect these might have on a potential buyer," said Hank Lerner, director of law and policy at the Pennsylvania Association of Realtors.

There are no similar precedents in New Jersey, but there is one nuance to the law: If a buyer in New Jersey directly asks a seller about "psychological" defects, a seller must disclose them if he or she is aware of them.

Even so, there are ways buyers can find some answers for themselves.

Nearly four years ago, software project manager Roy Condrey developed a website, DiedInHouse.com, to allow buyers to track the history of a home for a small fee.

To create the database, Condrey built an algorithm that collects information from news articles, police reports, property records, death records, sex-offender registries, and other sources to provide users information related to crimes, fires, drug-related incidents, and other events. Though he acknowledges the database is not comprehensive, Condrey said his team is working to provide users "everything we can … instantly." There are nearly five million incidents in his system, he said. One search costs $12; three, he said, is about $20.

"Everyone has their own opinion, but if there was a murder-suicide in my home, I would want to know," Condrey said. "The laws in the industry kind of marginalize that."