When looking to purchase real estate in Ontario, buyers should always perform their due diligence regarding the property. While this makes sense in terms of performing a physical home inspection with a licensed home inspector before finalizing the agreement, what about investigating non-physical issues with the property such as whether or not a murder ever took place in the home? In this blog post, we will explore the legal issues surrounding disclosure during real estate transactions in Ontario and whether or not sellers must legally disclose unnatural deaths that have taken place in the home.
What is a stigmatized property?
Stigmatized properties are those which have non-physical issues or features that may affect their selling value. This includes events such as past homicides, suicides, or unnatural deaths and can also include supernatural issues, such as evidence that the home may be haunted. While some buyers may think these issues are immaterial, these non-physical issues may be of interest to some residential property buyers who may offer less in their purchase agreement if they knew of their existence. As such, many buyers believe that these stigmatizing issues must legally be disclosed to them during negotiations for the purchase of any property in Ontario. However, this is not necessarily the case.
Do you have to disclose a death or murder in a house in Ontario?
The 2006 case of Knight v. Dionne in Quebec is of interest here as Quebec law, unlike Ontario law, requires sellers to disclose issues that may reduce the value of the property. In this case, the buyer sued the seller of the home when they found out that the seller's son had committed suicide in the home. The court ruled that personal fears and phobias were not enough to warrant legal action, and that the seller knowing about the suicide in the home did not render the home inhabitable or decrease the value.
In Ontario, there is no legal requirement as of yet for sellers or their real estate agent to disclose a past death or murder in the home. This applies to sellers who have no knowledge of past events in the home (since they aren't the original owners), and it also applies to sellers who do have knowledge of past stigmatizing events in the home.
The Ontario Real Estate Association, however, holds the opinion that its realtors should disclose stigmatizing issues when they are representing sellers who know of such events. As the association that represents real estate agents in Ontario, OREA states that realtors have an ethical obligation to disclose these issues to prevent issues down the road relating to agreements and negotiations relating to that property.
What about haunted properties?
The sale of potentially haunted properties is actually covered under Ontario case law. In 2013, the Superior Court of Justice heard 1784773 Ont. Inc. v K-W Labour Association et al, 2013 ONSC 5401, a case where a commercial property purchaser sued the seller in Kitchener for not disclosing that the property was haunted. The purchaser had purchased a commercial property in September 2010, only to read in a local newspaper article in December 2010 that there were rumors that the building was haunted on the third floor. The judge decided that the commercial vendor did not have a duty to disclose these stigmatizing issues as they did not affect the actual state of the building or its function as a commercial building.
Buyer beware in Ontario real estate
Most real estate lawyers and real estate agents in Ontario will agree that the best course of action when purchasing a property is to ask the sellers about the existence of any stigmatizing issues. Unlike leaking septic tanks or holes in the roof, these sorts of issues will not be found during a home inspection. If stigmatizing issues are important to you as a buyer, clauses can also be added to the written agreement asking the sellers to disclose if they have knowledge of any past murders, suicides or unnatural deaths in the home. Finally, it is also an option to talk to neighbours in the area to determine if the property in question has any issues that may be publicly known.
If you are looking to purchase commercial or residential property in Ontario and have any questions relating to the legal disclosure of physical or stigmatizing issues, contact real estate lawyer Michael Brown to discuss your specific legal issue.