Murder, Ghosts and Other Chilling Things You May Not Know Before Purchasing Property

By Slonee Malhotra

Buyer Beware: Sellers are under no obligation to disclose certain types of events that occurred in the property.

The doctrine of caveat emptor (“buyer beware”) generally applies to the sale of land. The responsibility to make inquiries falls on the buyer. A buyer who fails to protect herself, by contract or inspection, will be without remedy in the absence of fraud.[1]

There are two types of defects in the real estate context: patent defects and latent defects.

• Patent defects are those discoverable upon a normal inspection of the property, or upon making reasonable inquiries. An uneven floor or a hole in the wall are examples of patent defects.
• Latent defects, meanwhile, are those defects which are known by the seller, render the property dangerous and/or unfit for human habitation, and which are not discoverable upon a normal inspection or upon making reasonable inquiries. Latent defects include a buried leaky oil tank, faulty wiring, or a termite problem.

Absent specific warranties or representations, a buyer purchases a property in “as-is” condition. The seller is not liable to disclose any patent defects. The failure to disclose a latent defect, however, can allow the buyer to rescind the agreement and/or sue the seller for damages.

It is not always obvious whether something is a patent or latent defect. What about murder? Or suicide? What obligation might a seller have to disclose such an event?

Disclosure Obligations After Tragic Deaths

A tragic death on a property is not in itself a latent defect.

In a 2006 Quebec small claims court case[2], the seller of a residential property did not disclose that the seller’s son had died by suicide on the property ten years prior. The buyer learned of the tragedy from neighbours several months after closing. The buyer sued for damages, claiming she would have never purchased the house if she had known that a death by suicide had occurred.

The Court found that death, suicide, or even murder in a house could not be something which the seller is obliged to disclose to the buyer, “just as there is no obligation to disclose domestic violence, trespasses, births, marriages, baptisms, or other life events, whether happy or sad, that may have occurred there.”[3] It would be impossible for a seller to know what event would have a material impact on a buyer’s decision to purchase the home. The only person who would know what event occurring on a property would prevent them from purchasing it would be the buyer. As a result, if a buyer does not want to purchase a house in which someone has died by suicide, it is incumbent upon the buyer to specifically ask whether such a tragedy has occurred within the home.

More recently, the British Columbia Court of Appeal has agreed with this approach. In 2007, a man was murdered on the sidewalk outside the front gate of his Vancouver home. After the murder, the private school that the deceased’s daughter attended asked her to leave the school, citing concerns for the safety of the other students. The daughter transferred to a different school in a different area of the city and she and her mother moved closer to the new school. The owner of the house, the deceased’s mother-in-law, put the house up for sale. The eventual buyer of the property did not make any inquiry about whether any deaths had occurred at or near the property, nor did the seller disclose the murder or identify it as a latent defect. The buyer did ask why the seller was selling the property; the real estate agent advised that it was for the family to be closer to their child’s school. The buyer signed an agreement to purchase the property.

Before the sale of the house was complete, the buyer found out about the murder. She cancelled the purchase, claiming misrepresentation by omission. The house sold to months later to another buyer for significantly less than the original buyer had agreed to pay. The seller sued the would-be buyer for breach of contract, and the would-be buyer countersued for misrepresentation.

At trial[4], the Court ruled in the would-be buyer’s favour. Though the Court agreed that the murder was not a latent defect, it found that the seller had made a fraudulent misrepresentation by omission to the buyer. The seller disclosed what amounted to a “half-truth”: the family did move to be closer to the child’s school, but did not add the part about the child being forced out of her school due to the murder which took place in front of the home.

The seller appealed the decision[5], submitting that the trial judge erred in concluding that by failing to disclose the murder, the seller had made a fraudulent misrepresentation which entitled the buyer to repudiate the contract. The BC Court of Appeal agreed that the trial judge had erred, for reasons akin to those of the Quebec small claims court in the case cited above. “Imagine”, the Court stated, “the following situations:

1. An owner wishes to sell and when asked why, replies that she is getting a divorce. Is she required to disclose that her husband often assaulted her in their bedroom? Or why he assaulted her? Or that she has been committing adultery with another man?

2. An owner wishes to sell and when asked why, replies that she is moving to a different city. Is she required to explain that…she has been fired from her job? Must she say she was fired for defalcation of funds? Or that she stole in order to pay gambling debts? Or that her children have been bullied by teenagers next door?

3. An owner wishes to sell his house for a long list of reasons, including as #10 on the list that he dislikes his neighbours (who are always wanting to borrow his tools) and as #15 on the list, that his late wife died there five years before. When asked why he is moving, he replies that ‘It’s time for a change.’”[6]

The Court confirmed that the onus is on the buyers to ask specific questions designed to unearth the facts related to the buyer’s particular sensitivities, superstitions, likes, and dislikes.[7]

A Word on Paranormal Concerns

In 2010, a purchaser bought a commercial property in Kitchener from K-W Labour Association Inc. A couple months later, an article appeared in the local paper in which the director of K-W Labour was quoted as saying the subject property was haunted: “I have heard this from a couple people – up on the third floor, there is an office up there and they said some days you see somebody moving around inside of there and there is nobody there.” Based solely on this spooky article, the purchaser brought an action on the basis that there was a latent defect in the property that K-W Labour knew about and either concealed from or failed to disclose to the purchaser.[8]

The director didn’t actually believe that there was a ghost on the property. The conversations about ghosts had occurred at social functions after a few beers and weren’t serious: “…[I]t was at a social function kind of thing, had a few beers and talking about the ghost up the stairs, hahaha…”[9]

The Court confirmed that a double hearsay rumor about a ghost from a couple of people who have had a few pints at a social function was not a latent defect. The purchasers made no suggestion that the building was unfit for habitation as a commercial building. There is no legal basis to require the vendor of a commercial building to advise a purchaser that a person has died in a building, how the person died, or of a rumour that the building might be haunted. In any event, the purchasers brought no evidence demonstrating how they would prove the existence of a ghost. The case was summarily dismissed.

This puts hauntings and ghost-based rumours in the same camp as tragedies: sellers have no obligation to disclose these as latent defects.

Obligations of Realtors

While sellers may have no obligation to disclose such topics as discussed above, the seller’s realtor might. Realtors are a part of a professional association, the Ontario Real Estate Association (“OREA”), which suggests that Realtors have a moral and ethical obligation to disclose issues like the stigma attached to a property. However, the Real Estate Council of Ontario (“RECO”), which governs the conduct of Realtors in Ontario, has admitted that observing and measuring something like stigma is a difficult task. The laws that govern Realtors do not provide a definition of “stigma” so it seems this is an entirely subjective suggestion by OREA.

What Buyers Should Know

Buyers are in the best position to know what kind of incident would have to occur at a property to render it undesirable to buy. As such, a buyer should ask the seller any necessary questions to unearth relevant information about any such incidents.

If you are buying property and are concerned about stigma, consider asking for the seller to include a warranty similar to the below:

“The Seller warrants and represents to the best of his/her knowledge and belief that there have been no deaths, murders, suicides or unnatural violent injuries to persons in and about the property since the Seller acquired ownership.”

As always, complete your own due diligence. Research the property address and neighbourhood through online search engines, discuss the property with neighbours, and make inquiries with your realtor.

Whether your property has been the site of a tragedy, is haunted, or is just a regular house, contact one of our qualified real estate lawyers for your real estate needs!