Does a seller have to disclose if someone died in their home? #RealEstate #Stigma

I encountered a situation recently where I was asked to do a walk through of a property that may be listed soon. I was told that the owner of the home had died peacefully in her bed. The sellers thought the fact that the owner had died at home was quite lovely, and I understand that totally. From the family’s point of view, or that of close friends, it’s what we all hope for.

Unfortunately, that’s not always how buyers see it. A death in the home can be considered a stigma.

As to the question of whether that has to be disclosed, this is where realtors’ ethical obligations conflict with the law. According to one Ontario case (which dealt with a commercial property) and one Quebec case, that doesn’t apply in Ontario, there is no legal requirement of disclosure, even if the death was violent, such as a murder-suicide. However, no Ontario cases that I’m aware of have dealt with the issue of disclosure where it’s a residential purchase.

On the other hand, realtors in Ontario are required by a legislated Code of Ethics to disclose material facts (ones that are “material” to the buyer’s decision, i.e. that might affect their decision) and latent (hidden) defects that are only known to the seller. Some buyers won’t care at all about a death in the property, but others will,  and a death, even if it isn’t violent, could affect their decision to buy.

It’s one of those things where if it isn’t disclosed, a buyer may well find out from neighbours and if they were one of those people who wouldn’t have purchased if they’d known, it’s an invitation to litigation. Those two cases refer to situations where people didn’t disclose and got sued, and that’s not something any seller wants to experience.

We have to disclose material facts, as realtors. Is a death in the house a material fact? I think that’s the core of the issue. If it is, it should be disclosed; it’s not something a buyer could find out easily. It isn’t something that’s going to show up in the home inspection. (At least I hope not.) If it isn’t, then, no, you don’t have to disclose unless the buyer asks.

Some agents dealing with stigma properties, like grow ops, simply put a line in the listing that says to contact them for more information. Some put that information in the listing. What do you do if there was a murder or a suicide? Or if someone passed away in their sleep?

The manager of my brokerage, Brian Sukkau, and I have talked about this and he is of the view that it’s a material fact that should be disclosed, given our realtor Code of Ethics, and the fact that it could affect the decision of a prospective buyer. The Registrar for the Real Estate Council of Ontario, however, notes that there is no case law requiring disclosure of any stigma property, not even grow ops, or the sites of violent murders and urges sellers to get legal advice. 

For my part, I’d probably err on the side of disclosure. If a buyer wouldn’t mind, it can’t hurt; if it would make them walk away from a deal, I’d rather they know ahead of time.

Sometimes buyers ask when if it’s an estate sale; sometimes they don’t. But I know of one deal in my office that fell apart when the relative selling the listing didn’t actually know that the homeowner had died in the house, and so the agent didn’t know either, and didn’t disclose. Then the seller found out what had happened from an ambulance report, as I recall,  and disclosed, and the buyer walked away from the deal altogether.

Brian, my manager,  thinks that rumours that a home may be haunted should be disclosed too. I don’t believe in ghosts – why should I disclose?

Well, a famous  New York ruling  (known as the GhostBusters case) supports the requirement of disclosure where the sellers believe a home is haunted. It didn’t deal with the situation where the sellers don’t believe in ghosts, however. Is the test of disclosure a subjective one (how this buyer or seller feels about it) or an objective one (the “reasonable” buyer or “reasonable” seller) ? How would a “reasonable” buyer or seller believe in ghosts? Not easy questions to resolve and we don’t have any caselaw to help us.

(That said, I saw ahouse listed for sale in Halifax where the agent put up a sign topper that said “NOT HAUNTED.” That’s certainly covering your bases!)

The situation certainly isn’t black and white and reasonable people can disagree. What do you think?

UPDATE: According to real estate lawyer Bob Aaron, Quebec now has a law requiring disclosure of stigma properties. He refers to a situation in Toronto where the buyers were not told of a suicide in the property and were actually misled by the sellers as to the reason why renos were done in the basement. (No realtors were involved, but in his column he points out the same conflict I do between our duties as realtors and the law.)





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