Defining stigmatized properties

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Subramanyam Narasimhan /
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Defining stigmatized properties

Defining stigmatized properties

A stigmatized property is a property that buyers or tenants avoid for reasons unrelated to its physical condition or features. These usually include a murder or a suicide that took place inside the property, often accompanied by a belief that the house may be haunted — which is, of course, a very controversial concept.
What types of stigmatized properties exist?
Several kinds of stigmatized properties are recognized by various jurisdictions that have passed resolutions or statutes to deal with them. They are usually separated by disclosure — the amount of information required to be disclosed by the seller depends both on the local law and the type of stigma.
The most common types are:

1. Public stigma
•   known to a wide range of the population
•   must always be disclosed in almost all jurisdictions
•   examples: Amityville Horror house, home of the Menendez brothers
•   biggest turn-offs: unwanted attention, bad reputations, psychological effects

2. Criminal stigma:
•   ongoing commission of a crime that took place within the property
•   full disclosure required by most jurisdictions
•   examples: a chop shop, drug den, or brothel
•   Biggest turn-offs: bad reputation, unexpected visits – for example, uninformed drug addicts may come to your house expecting to purchase illegal drugs

3. Murder/suicide stigma
•   murder/suicide took place inside the property
•   realtors required to disclose the information by most jurisdictions
•   biggest turn-offs: psychological effects, fear of possible paranormal phenomena

Laws are unclear in Ontario
Let's say you are planning to buy a house in Toronto and you want to learn as much as you can about the property. Unfortunately, Ontario has no laws that require disclosure if a house is stigmatized. A seller is not obliged to disclosed any information about murders, suicides, or anything else untoward that might have happened in the home. Realtors, on the other hand, should disclose any factor that may have an impact on property value, including psychological factors. Nevertheless, they still have to be careful to avoid error, misrepresentation, and concealment of these facts.
There have already been many calls for clearer legislation in this matter, but this area of the housing market remains tricky. Drawing a clear line between important and unimportant information can be difficult. A house having been the scene of a crime is a fact, but can the presence of an apparition be a fact? If the neighbourhood believes that the property is a former drug den, though it has never been proven, does it make the house stigmatized?
There has been an obvious tendency in the Canadian real estate industry recently to embrace full disclosure of all the information. It is probably based on the assumption that the more that is told, the lower the probability of being sued for having concealed some fact. In any case, if you're a buyer, the best idea would be to simply ask for as much information as you can. You have the right to know everything you need to make a choice.

Is stigma always a bad thing?

Though the label "stigmatized" carries negative connotations, there have been cases when a stigmatized property was sold more easily than usual. Some realtors even reported buyers actually "battling" for an allegedly haunted house. There are houses that even benefit from the notoriety. For instance, the Lizzie Borden residence in Fall River, Massachusetts is now a successful Bed & Breakfast that allows guests to sleep in the rooms where the infamous axe murders took place. There is gift shop in the house as well.
Stigma often affects price of a property in a negative way. On the other hand, research shows that time will usually soften most stigmas. Although they have the ability to discourage buyers and therefore decrease the value of the property, it is typically much easier to sell the house again for a much better price after some time has passed.

Stigmatized properties in Toronto

Though the Toronto police maintain a list of marijuana grow operations, there's no publicly available list of the local homes that have been the sites of suicides, murders, or other crimes. However, you can still keep an eye out for any "haunted" properties in Ontario by simply visiting this website: http://torontoghosts.org/.

How about you? Would you buy a house that is reported to be haunted?

A few years ago, I purchased my home. It was an Estate Sale. As part of the negotiations, I inevitably asked my Realtor to enquire to the vendor’s Realtor, “did the deceased pass away in the home?” The Realtor for the vendor confirmed that as far as she knew, the deceased passed away in a hospice care facility. After closing, I briefly met with the executor of the estate to discuss minor maintenance tips associated with the home. During the course of our discussions and without my prompting, he confirmed that the deceased did indeed pass away in hospice care.
At some level, asking the question, “has anyone ever died in the home?”, seems juvenile or trifling. Many resale homes are decades old. In older communities, rural areas and more established neighborhoods, some homes can trace their history back to the early years of Confederation. It is entirely possible that someone could have passed away in a home long before a current seller took title. That said, it could be very important for some buyers to know whether a property was the site of a death. For example, a colleague of mine once acted on a purchase where the sellers voluntarily disclosed that the home was the site of a murder-suicide in the early 1980’s. The vendors even included an old newspaper article summarizing the affair with the amended offer to purchase.

So the question arises: in Ontario - is there a positive duty on a Seller to disclose his or her knowledge of a death, murder or suicide in the home? The answer at this stage is “No.”

In the recent Ontario case of 1784773 Ont. Inc. v K-W Labour Association et al,[1] a corporate purchaser of a commercial property sued the vendor for failing to disclose that the property was haunted. The basis for the claim was a newspaper article where a director of the defendant vendor acknowledged that the subject property was haunted. Relying on the article, the purchaser claimed that the property’s haunted nature was a latent defect that ought to have been disclosed. Justice James W. Sloan found no case law or other authority that obligates a vendor to disclose that someone has died in a building, how they died or a rumour that the building might be haunted or stigmatized as a result of the death.[2] The court found no evidence to suggest that the building was unfit for habitation or commercial use.[3] Further, no evidence was put forward to prove that the property was the site of a death or that in fact a ghost existed on the lands.[4] The claim was dismissed with costs awarded against the claimant.

In the 2006 Quebec case of Knight v. Dionne,[5] the purchaser of a house sued the vendor for failing to disclose that the vendor’s son committed suicide in the house. The purchaser was very disturbed when a neighbour informed her that the vendor’s son had hung himself in the basement of the property some ten years prior to completion of the purchase.[6] The purchaser claimed that she would never have bought the house had she known of the suicide. In this case, the court found that personal fears, phobias, sentiments or sensitivity to such matters based on purely subjective apprehensions is not a valid reason to sue.[7] The court went on to say that it would be an “impossible burden” to require vendors to assess whether some personal events that occurred on a given property should be disclosed to a prospective purchaser.[8] It is salient to note that in this case the court found that the purchaser’s knowledge of the suicide did not render the building in any way uninhabitable.[9] The Realtors who acted on the matter also noted in their testimony that it is not common practice to ask a vendor if someone has died in the home.[10] The court noted that the best solution is for buyers to ask questions up front about what is important to them with respect to a given property and its history.[11] The claim was dismissed.

Based on the above decisions, in situations where someone has died in a property, the principle of caveat emptor, otherwise known as “buyer beware” still applies.

There are certain steps buyers can take if they are concerned about purchasing a “murder house” or a haunted property. One of the advantages of using a realtor in Ontario is that real estate agents can take steps to determine and obtain disclosure of facts relating to the property that may be relevant or material considerations for their respective clients.[12] If a buyer is particularly sensitive to the possibility that a property is a site of a past murder, suicide or if it is haunted – then they should instruct their realtor to make such enquiries of the seller’s realtor to such effect. It is difficult to draw a line between what should be disclosed and what should not when it comes to murder, suicides or the haunting/stigmatization of a property. What is considered material may depend on the nature, timing and proximity of the event. Ultimately, a buyer should ask the questions that are important to them.

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