Buyer Beware: Is Your New House Haunted?

You’ve finally found your dream home. It’s a high-ceilinged, century home with original mouldings and mature trees. Sure, it’s been a little neglected, but all you see is a canvas for your Pinterest-inspired renovations.  

But when you move in, an eerie feeling wakes you in the middle of the night. You open your eyes, and a Victorian-era woman is silently standing over you. All your terrified mind can think of is, “can I sue the sellers?” 

Caveat Emptor

The basic legal principle in real estate is caveat emptor (Latin: “let the buyer beware”). It denotes that buyers have to satisfy themselves that the house is fit for their purpose. 

The seller is only required to disclose “latent defects”, which are defined as known, physical defects that are not discoverable upon inspection. Failure to disclose a latent defect allows a purchaser to get out of the deal or to sue for damages. But is a haunting a latent defect?

Stigmatized Real Estate 

In a 2014 Kitchener court case, a seller was sued when he was quoted in the newspaper stating that a property he had sold was haunted. 

While the trial court held that there is no obligation to disclose a rumoured haunting, the court of appeal suggested that direct evidence of economic loss as a result of the “stigma” of a haunted property might have been sufficient. 

The Real Estate Council of Ontario defines a “stigma” as a non-physical, intangible attribute of a property that may elicit a psychological or emotional response on the part of a potential buyer.  

Death, suicide, or murder are all examples of events that can lead to devaluation of a stigmatized home, so it’s not unthinkable that rumours of hauntings could too. The law is that a stigma is not a defect that must be voluntarily disclosed and “buyer beware” applies.

If you’re worried about ghosts, the best advice is to ask the seller. If the seller knows this is material to the buyer’s decision, they may be held legally responsible for a false or misleading answer. 

 

Michael Connell, Real Estate Lawyer, Siskinds