Disclosing a property's stigma falls into legal grey area in Ontario

This article looks at disclosure requirements for real estate agents concerning a property's stigma.

While legal disclosure may not exist, industry standards could help homebuyers

Homebuyers often rely on a real estate agent to fully disclose any potential defects with a property that they are considering buying. While the law requires real estate agents to fully disclose known physical problems with a property, such requirements are less clear when it comes to any stigma - such as a violent crime or even a purported haunting - associated with a house, according to the Toronto Star. While the legal requirement to disclose stigma may be unclear, real estate disputes relating to stigma do happen, especially given Toronto's competitive real estate market.

Ghosts and crimes

While events that have occurred on a property may not affect that property physically, it can have a significant impact on its attractiveness on the real estate market. If a house was the scene of a violent event, such as a murder or suicide, then many homebuyers will be understandably hesitant about purchasing such a property. The same principle holds true in cases where a house was used as a grow-op or if it was the home of a well-known criminal, even if such activities have not affected the physical condition of the home.

Even superstitions can play a role in a property's value. As CTV News recently reported, in some neighbourhoods a house associated with a lucky or unlucky number can result in a 2 percent difference in the final sale price of the home. Additionally, even if homebuyers themselves are not superstitious, they often want to know whether a house has a reputation for paranormal events given that such a reputation can impact the house's resale value later on.

Disclosure law unclear

The requirement of real estate agents to disclose a house's stigma falls into a legal grey area in Ontario. Currently, Quebec is the only province requiring real estate agents to notify potential buyers of a property's violent history. Furthermore, the Real Estate Council of Ontario claims there is no law obliging agents to disclose a property's stigma.

Some real estate experts, however, say that agents do have such an obligation if they are aware of such problems. The real estate agent Code of Ethics, for example, requires real estate agents to act "fairly, honest and with integrity," suggesting they could be obligated to inform potential buyers of a property's less-than-desirable history.

Real estate litigation

In Toronto's hot property market, buyers often find themselves under significant pressure to finalize a deal quickly. In such cases, problems with a property either can go unreported or may be downplayed by a seller or real estate agent.

In such a situation, it is important to reach out to an experienced real estate lawyer. Whenever a dispute arises during the course of a real estate transaction, a well-qualified lawyer can help both buyers and sellers ensure that their rights and interests are diligently and aggressively represented.

Keywords: stigma , help homebuyers, Ghosts and crimes, Disclosure law unclear, real estate disputes, Real estate litigation, real estate market