Legally Speaking - July 2016 (487)
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Number 487, July 2016

BOO YOU REALLY WANT TO KNOW?

Jennifer CleeLicensees often ask whether a death at a property must be disclosed by the seller, be it death by murder, natural causes, accident or suicide. The simple answer is no. However, there are practical considerations that may make disclosure of such events beneficial to the seller.

Seller's Disclosure Duty

Sellers and their agents have a common law duty to disclose material latent defects of which they have knowledge, rendering the property dangerous or unfit for habitation. Latent defects — those not discoverable upon a reasonable investigation by a buyer or the buyer's home inspector — concern defects directly related to the intrinsic quality of the building or property itself which, applying an objective standard, materially affect the property's use or value. A licensee acting on behalf of a seller has the professional duty to disclose any material latent defects as defined by Section 5-13 of the Real Estate Council of British Columbia's Rules.

Events at a property, such as a suicide, or a murder in the home, or a claim that the home is haunted, are often referred to as stigmas or stigmatizations. These do not affect the objective value of a property, though they may make a property less (or more) attractive to certain individuals due to subjective considerations. A seller is not required to disclose stigmas or stigmatizations.

It is the buyers' responsibility to ask questions about any personal considerations that could affect their enjoyment of a property. As stated in Summach v. Allen:1"…to allow defects to be determined by individual preferences would open the floodgates of litigation by remorseful purchasers and create an impossible standard of disclosure for vendors."

A Quebec Court,2 considering the seller's duty to disclose his son's suicide ten years earlier at the property, put it this way: "The court has a great deal of difficulty in agreeing that elements whose importance depends on the sensitivity, phobias, sentiments, or purely personal and subjective apprehensions that are not related to the quality of the building should be subject to compulsory disclosure. Imposing such rules would place an impossible burden on the shoulders of a seller in assessing which of the events that had occurred in the house might be important in the mind of the buyer and therefore of consequence in terms of his decision."

Seller's Duty When Asked

If a buyer asks the seller about an event or occurrence, such as a death at the property, the seller may either answer the question or decline to answer the question. However, the seller must not misrepresent or mislead the buyer. Thus, a seller of a haunted mansion declining to answer a buyer's question as to whether the property is haunted should state that he is declining to answer the question rather than answering, "Not a ghost of a chance."

Failing to disclose a stigma may expose the seller to an expensive and time consuming lawsuit if the buyer subsequently learns of the stigma; disclosing a stigma will avoid that risk.

Seller's Agent's Disclosure Duty

A seller's agent is not required to disclose a stigma to a buyer unless:
  i) The seller's agent also represents the buyer who has indicated a concern about the stigma; or
  ii) The seller's agent has been authorized by the seller to answer a buyer's question about the existence of the stigma.
 
As the law is continually changing, to avoid complaints or claims by sellers or buyers relating to the non-disclosure of stigmas, sellers' licensee should advise sellers in writing to obtain independent legal advice regarding their obligation to disclose known stigmas associated with their property.

Jennifer Clee
B.A., LL.B.

  1. Summach v. Allen, 2002 B.C.S.C. 119.
  2. Knight v. Dionne, 2006 Q.C.C.Q. 1260.
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