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Should home sellers disclose if someone died in the house?

Posted by Milana Cizmar on January 24, 2013

real estate keyBy Mark Weisleder

Buying a home: Dealing with the death house stigma

In November the Toronto Star reportedthat a Bowmanville couple is suing their real estate agent and the people from whom they bought their house for not disclosing that there had been a double murder there 15 years earlier — including that of a 6-year-old girl.

Two years ago in Orangeville, a homebuyer was able to get out of his deal after learning that the house was owned by a nurse who had been murdered nearby.

These cases, and others like it, raise interesting legal issues about what should or shouldn’t be disclosed when a house is sold. Should sellers be required to say that there has been a murder or suicide in the house? If yes, how far back should you go? One year, five years, 10 years? About half of American states require disclosure if the death happened within three years. In Canada, there are no laws governing these situations.

For buyers and sellers, the question is whether disclosing this information will affect the value of the property. Toronto real estate agent and appraiser Barry Lebow believes it does.

Lebow, who has 45 years in the business including giving expert evidence on property stigmas, says a “death house” carries a stigma that will almost always negatively affect its value. In many cases, the home has to be demolished and the address changed. In other cases, even if it does not bother a current buyer, it will bother a future buyer when they try and sell it later.

In 1974, Hungarian-born real estate developer Peter Demeter was convicted of arranging the murder of his wife at their Mississauga home. He later couldn’t sell the home so he arranged for someone to burn it down in 1983. He was later convicted of arson. Not a good plan.

The home on Bayview Ave. in St. Catharines that Paul Bernardo used to commit his sexual assaults and tortures was later demolished. The new home built there was given a different street address, to further distance it from what had occurred in the past.

In Lebow’s opinion if you live near a murder house, the stigma will typically not affect the value of neighbouring properties. But even so, what goes on next door can be an issue.

In a 1998 case from Kelowna, B. C., Ron and Marlene Allen made an offer to buy a beachfront house. They asked the sellers, Ken and Dorothy Summach about the empty lot next door. The Summachs said it was a public beach, neglecting to say it was a nude beach.

The Allens refused to close. Now some might think a nude beach would add value to the home, but the Allens didn’t. Five years later, the B.C. Court of Appeal decided the Summach’s did not need to disclose that fact, as the ‘defect’ was not occurring on their property.

A little closer to the GTA, a couple with two young children bought a home in Bracebridge. The sellers did not disclose that the house across the street was owned by a man convicted of possessing child pornography. The buyers sued and the sellers brought a motion to have the case thrown out. They argued they weren’t under an obligation to disclose the fact.

In a decision dated March 3, 2010, Judge Alexandra Hoy let the suit go ahead. She said:

“The buyers’ claim is novel. And it raises policy issues, including the protection of children and whether, if successful, the claim will have the effect of making the re-integration of persons convicted of certain crimes into society more difficult.”

The buyers never moved in. They subsequently resold the home at a loss and settled the case out of court with the sellers. So we will not learn what the final decision might have been.

In Ontario, real estate agents must disclose any material fact that they are aware of under the rules of their Code of Ethics. In my opinion this includes whether a murder or suicide had occurred on the property and could also include certain neighbourhood conditions.

Buyers can always Google the property address which will likely turn up articles about prior violent crimes. Before you buy, you can always tour the neighbourhood, speak to people and ask questions about the home. In addition, put a clause in your offer where the seller states that they are not aware of any murder or suicide ever being committed on the property in the past. If sellers are asked, they must respond truthfully.

It is time for government to give guidance on what stigmas need to be disclosed, so that buyers, sellers and real estate agents are better prepared for this very difficult issue when buying or selling a home.

Mark Weisleder is a Toronto real estate lawyer. Contact him at [email protected]

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