Is a real estate agent obligated to disclose to purchaser clients whether the house they are interested in buying is stigmatized by a connection to a crime, murder, suicide, marijuana grow-op or haunting by ghosts?
That’s the question that arose late last year when I wrote about a court case in which the buyer unsuccessfully sued the seller following rumours that the building was haunted.
In the view of the Real Estate Council of Ontario, the provincial regulator of the profession, there is no obligation for an agent to disclose the existence of stigma to buyers.
A registrar’s bulletin entitled “Stigmatizing Issues” is published on RECO’s website at reco.on.ca. The bulletin is a guideline for real estate agents and is also useful to help members of the public know what to expect from real estate agents in these circumstances.
As examples of stigmatized properties, the bulletin cites:
- the property was used in the ongoing commission of a crime (e.g., drug dealing, chop shop, brothel);
- a murder or suicide occurred at the property;
- the property was previously occupied by a notorious individual, such as an organized crime figure or known murderer;
- there are reports that the property is haunted;
- the house was a former grow-op, which has been properly remediated.
If a real estate agent is not informed about a property’s stigma, there is no obligation to disclose it. I also stated that Ontario agents are obliged to disclose the existence of stigma if they know about it.
After the column appeared, RECO contacted me to say my statements were incorrect and pointed out their bulletin on stigma which states — incorrectly in my view — “there is no legislation or case law in Ontario to suggest that a seller, or his or her representative, is required to disclose the existence of stigmas to buyers.”
But, in my view, that statement is wrong.