October 25th, 2013
Remember as a child, that vacant house in your neighbourhood that stood in the shadows and was rumoured to have been the home of several scary ghosts. Remember when you drove past and observed a new family emptying a U-Haul and thinking to yourself, “Uh oh…I hope they know what they are getting into…”
Unfortunately, they didn't.
The law in Ontario is quite clear that the presence or perceived presence of ghosts does not require disclosure. Houses with dark histories are commonly known as stigmatized properties. The common law has traditionally viewed these stigmas as patent defects, meaning that the onus is on the buyers to discover the defects. In other words, in Ontario, buyer(s) beware...of the ghosts roaming in the attic!
Unlike Ontario, several jurisdictions have implemented legislation to protect potential buyers. While the legislature remains silent on the issue in Ontario, advocates of disclosure have looked to the provisions in the Real Estate and Business Brokers Act to enforce an obligation. Pursuant to the Act, realtors must disclose all facts within their knowledge which affect or will affect resale value. Advocates of disclosure claim that even a perception of the supernatural surrounding a house drastically influences its value, and thus, it should be disclosed. In further support, the Ontario Real Estate Association (OREA) and the Real Estate Council of Ontario both recommend that realtors disclose stigmas to buyers in order to protect against future lawsuits.
Disclosure requirements are currently being litigated in the Ontario Superior Court of Justice. In 2011, Eric and Sade-Lea Tekoniemi purchased a house in Bowmanville only to learn that a double-homicide took place there 15 years earlier. Consequently, they sued the seller, real estate agent and the real estate agent's firm, claiming that all three defendants had a duty to disclose as the stigma psychologically impacted and tainted the property. How this case is ultimately decided by the court will have a major impact on the disclosure requirements of sellers and real estate agents going forward.
In the meantime, however, buyers must remain cautious and proactive. Some simple things that buyers can do to protect themselves from purchasing a stigmatized property are to perform an internet search of the property, looking for any related stories, discuss the property with nosey neighbours, and most importantly, speak to the sellers and ask if they know of any murders, suicides or deaths occurring at the house. Whatever they answer, buyers should write it down and incorporate it into the agreement of purchase and sale as a warranty.
Matthew Wilson is a residential real estate lawyer at the London Ontario law firm, Lerners LLP. See his professional biography for more information about Matthew and his work in the area of residentail real estate or email him at firstname.lastname@example.org.
The content contained in this blog is intended to provide information about the subject matter and is not intended as legal advice. If you would like further information or advice please contact the author.