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Earlier this year, when homebuyers in Hudson, Que., sued the prior owners after discovering a deadly home invasion took place in 2020, the case hinged on one major detail: The sellers allegedly didn’t disclose that a violent death had taken place in the house.
Quebec is unique in Canada, in that sellers in the province must fill a declaration form that asks these kinds of questions about a home’s past.
But in the rest of the country, lawyer Alan Silverstein said disclosure of a home’s history – such as a murder, suicide or criminal activity that occurred on the property – tends to fall under caveat emptor, meaning “let the buyer beware.” Essentially, the buyer must do their own due diligence.
There are some exceptions, such as health and safety considerations, including the presence of asbestos, which must be disclosed, said Mr. Silverstein.
But there are grey areas, too. Real estate lawyer John Aruldason cited a well-known case in which Canadian NBA superstar Shai Gilgeous-Alexander‘s purchase of a multimillion-dollar lakefront mansion in Burlington, Ont., was reversed by a provincial court.
The previous occupant of the home was self-described “Crypto King” Aiden Pleterski, who is accused of defrauding investors. Soon after moving in, Mr. Gilgeous-Alexander learned of an alleged series of threatening visits to the property by those looking for Mr. Pleterski to get their money back.
In that case, the property’s history was legally considered a “latent defect.” In other words, it was a hidden flaw in the function of the home that wasn’t disclosed.
Mr. Silverstein says the current legislation around home-sales disclosure in most of Canada puts the onus on buyers to pry for details, and for sellers to figure out what they’re actually required to disclose on their own.
The Ontario Real Estate Association, which represents nearly 100,000 real estate professionals, says that while realtors should try to uncover details that could affect a property’s value and reputation, the seller ultimately has no responsibility to divulge these details unless asked.
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Mr. Silverstein said that in California, there are well-defined rules on every single detail that needs to be disclosed. For example, a death within the last three years must be disclosed.
“We need some clarity, and we don’t have that, and neither do many of the provinces as I understand it,” said Mr. Silverstein.
Here’s a look at some scenarios that buyers might want to look out for, and if sellers would be required to disclose details about the history of their properties in those instances.
Murder and death
Almost across the board, murders and deaths don’t have to be disclosed when selling a home. As a buyer, if the idea of living in a home where a death took place bothers you, the onus is on you to ask. At that point, a seller is required to answer truthfully.
Quebec is the exception, where a violent death or suicide in the home must be declared.
The strongest challenge of the standards outside of Quebec was in Vancouver, when a seller didn’t disclose that her son-in-law had been gunned down outside of their multimillion-dollar home in an alleged gang-related incident.
The buyer, Feng Yun Shao, cancelled the sale upon learning of the murder and demanded her $300,000 deposit back. The seller, Mei Zhen Wang, sued in response.
At first, the courts sided with Ms. Shao, saying her deposit should be returned because Ms. Wang offered an incomplete description of the house.
But a year later, the ruling was overturned on appeal, and the judge said there was no way that Ms. Wang could have known that the buyer might be sensitive to the killing.
Brian Madigan, a former lawyer and realtor with Re/Max West Realty Inc., who has frequently been called as an expert witness for client-agent legal disputes, said it’s possible the courts would rule differently if a notorious murder or crime happened on a property. That could include homes such as the one where Paul Bernardo and Karla Homolka killed multiple teenagers, or the home where billionaire couple Barry and Honey Sherman were found dead.
But in these cases, Mr. Madigan said the home is usually torn down anyway. The St. Catharines home where Mr. Bernardo and Ms. Homolka committed their crimes was demolished, as was Mr. and Ms. Sherman’s Toronto mansion.
Neighbours and reputation
The courts have also set a precedent for the disclosure of certain kinds of neighbours, ruling that they can be considered a latent defect. The case in question was eventually settled out of court, however, so a final verdict wasn’t made.
In that case, Mr. Madigan said someone with young children had purchased a home in Ontario, only to learn that it was common knowledge in the neighbourhood that a convicted pedophile lived across the street.
The judge ruled that a risk outside the home can be considered a latent defect, siding with the buyers during the seller’s motion to dismiss the case entirely.
Cannabis and meth labs
One instance in which prior criminal activity must be reported in many jurisdictions is when a house was used for an illegal cannabis growing operation, or for the production of drugs such as methamphetamine.
However, the reason has nothing to do with negative perceptions or the discomfort a buyer might have about the property’s previous use.
Barry Lebow, a realtor in Toronto, says this kind of drug activity needs to be disclosed because it poses a risk around mould or tampered electrical systems. In one study he was involved in, Mr. Lebow found that homes where a cannabis growing operation took place could lose roughly 20 per cent of their value.
The circumstances must be solid to pursue legal action, however. He pointed to one case where buyers had heard rumours from neighbours that there was a grow op in the house. However, Mr. Lebow said disclosure wasn’t necessary because there was no police report, and the neighbours were more than a kilometre away.
“You can’t go on rumours,” he said.