By Shari Elliott

Your son is shot and killed in front of your house. When you sell, must this be disclosed?

Recent case law provides the answer to this, and disclosure obligations generally, for agents and sellers with regard to emotional vs physical situations that may have occurred at the property.



Every time I lead a discussion on disclosure it becomes an emotional exchange with people passionate about their position one way or the other. Recent the British Columbia Court of Appeal provided some much-needed clarity on items referred to as stigma and when and how to disclose.

In the case of Wang v. Shao, 2019 BCCA 130, the most sensitive of stigmas, murder, was considered. The seller’s son-in-law was murdered in a gang-related killing on the sidewalk outside the seller’s house. The publicity related to this killing resulted in the seller’s daughter having to change schools. The seller purchased a house closer to the new school her daughter was attending.

The seller put the property on the market. The seller’s agent was asked why the seller was moving and he said that he was informed it was because the seller’s daughter had changed schools. No further questions were asked and no further explanation was given. As part of the evidence provided in the resulting lawsuit, the seller disclosed that she was also moving for the safety of her children.

The Court of Appeal reviewed all the evidence and the decision of the lower court judge and stated that the rule of caveat emptor applies to the purchasing of property. This means the buyer alone is responsible for checking the quality and suitability of the goods before a purchase is made. But there are exceptions. You cannot misrepresent or tell half-truths.

The court decision provides a very clear and thorough review of the reasons for the finding that it is the buyers’ responsibility to ask questions to which a seller must truthfully answer. However, it should be noted that the property disclosure statements used in Quebec now include the following question: Has there been a suicide or violent death on the property?

In Wang v. Shao, the court reviewed relevant case law to make its determination. A similar case, Knight v. Dionne 2006 QCCA 1260 (CanLII), was reviewed. In that case, the seller failed to disclose the suicide of their son that had occurred 10 years prior to the sale. The court drew a distinction between “subjective and purely personal grounds” that could affect the value of a property in the eyes of an individual, from factors relating to the “objective and intrinsic” value of the property.

The judgment stated:

“It may be that, for some individuals, including the plaintiff and her spouse, the fact that a death – especially a death in tragic circumstances – has occurred in a home constitutes a subjective obstacle to purchase or occupation of this house.

“In such a case, it appears to us that it is up to the buyers to ask specific questions reflecting the phobias, fears or other subjective considerations that could, in their view, interfere with their full enjoyment of a building or even with their purchase of a home in the first place.  Once such a question is asked, the seller’s obligation to make full disclosure is heightened, and the seller must not induce erroneous consent through silence or a failure to disclose an element that appears to be important to the buyer, at the risk of having the validity of the sale contested in cases where the other party would not have contracted or would have contracted on different terms had all the information been known.

“The Court is of the position that the events and facts of the life of the residents of a residential property cannot normally be considered to be liable to significantly influence the consent of the adverse party, unless there have been questions asked about those events and facts.

“A death, suicide, or even a murder in a house cannot be considered to be something the seller is obliged to disclose to the buyer, just as there is no obligation to disclose domestic violence, trespasses, births, marriages, baptisms or other life events, whether happy or sad, that may have occurred there.

“The conclusion appears obvious to us, because if the compulsory disclosure of facts or events in the lives of the residents that are liable to significantly influence the buyer’s decision became a rule governing the sale of residential buildings, it would be extremely difficult to determine where the line should be drawn, and this could create a risk of unnecessary uncertainty.

“Would sellers have to disclose domestic violence or domestic arguments? And if so, starting at what level of violence? Could the divorce or separation of the sellers be a factor that affects the value of a house and therefore important to disclose so that the buyer can make an informed decision?

“In the case of a death, could the value of the residence be affected differently depending on whether the death had occurred suddenly, during sleep or after a long illness, or as a result of a suicide or a murder? And would the obligation to disclose vary accordingly?

“The Court has a great deal of difficulty in agreeing that elements whose importance depends on sensitivity, phobias, sentiments or purely personal and subjectively apprehensions that are not related to the quality of the building should be subject to compulsory disclosure. 

“Imposing such rules would place an impossible burden on the shoulders of the seller in assessing which of the events that had occurred in the house might be important in the mind of the buyer and therefore of consequence in terms of his decision.

“That is why it seems more logical to us that it should be buyers who have the obligation to ask questions that will enable them to ascertain that nothing that would prevent their full enjoyment had occurred in the house.”

In Wang, the Court of Appeal found that the trial judge erred in law in ruling that the seller’s answer to the buyer’s question constituted a misrepresentation by omission and erred in fact in finding that her answer to the buyer’s questions concealed a fact that the seller ought to have known was important to the buyer.

The Court of Appeal found that if the seller were under a duty to disclose why her daughter was not going to public school and why she left her previous private school, the law relating to real estate transactions would be turned on its head.

If the law were changed and required that upon being asked a general question like the one asked – “Why are you moving?” – then vendors would have to disclose all their personal reasons and explain the causes for those reasons, even when they had no relationship to the objective value or usefulness of the property. The door would be open to a huge number of claims. It would be extremely difficult to determine where the line should be drawn.

The rule that exists and is upheld by this decision of “buyer beware” is not intended to permit sellers to deceive buyers. Rather, it places the onus on the buyers to ask specific questions designed to unearth the facts relating to the buyers’ particular subjective likes and dislikes.

The finding in this case has been my position for years. I have researched and written/presented about the topic of disclosure extensively. I have made many an enemy over this very topic. While this case provides much-needed confirmation to the status of the law (absence legislation to the contrary) it is easy to understand why it is such a difficult area of the law. This case alone makes that point in that the lower court found for the purchaser.

The lower court felt the seller’s answer was a misrepresentation of why she was moving and fraudulent. The finding was in favour of the purchaser. The purchaser was provided their deposit and legal costs. It was on appeal that the principle of buyer beware was applied and the reason given for moving was found to be truthful and no further explanation was needed.

There are many people on either side of this issue. Some are adamant that any item considered a stigma must be disclosed including, murder, suicide, natural death, sexual assault and the list can go on and on. The very fact that some lists are longer than others is the first problem in the area.

The easiest way to view this area of law is to look at what most will agree is the worst thing that could happen in a house, murder.

The first place to look for guidance is laws and regulations. The only place in Canada with law pertaining to this area is Quebec; however, it is limited to three years to disclose if a murder occurred. No other stigma is legislated.

A canvass of the United States legislation reveals the same outcome. There are only some jurisdictions with laws with regard to disclosing if a murder occurred, and where there are, it is most commonly limited to three years. The next place to look for guidance would be the governing body of real estate agents. Here you have language around a material fact and the only guidance given is with regard to grow ops. The positions taken on that may change in light of recent legalization. With no guidance on material facts, we are left with the code of ethics that requires an agent to be truthful when an inquiry is made.

As a lawyer, the other place to look is to case law. Generally, the cases are consistent and rely upon the information provided. This is exactly how this case was decided. There is no law requiring disclosure; no standard that agents or sellers are held to. The default position is then to look to the contract language and determine if what is given as representations in the agreement are true and not misleading. If you are not required to disclosure something, you cannot say something untrue or misleading to avoid disclosure.

This case and the code of ethics of agents rely upon questions being asked and answered. Think about what the judge said in this case. Sellers are not required to disparage themselves. Does it make you think of criminal law? You have the right to remain silent. This pretty much sums up this issue for us too. You can remain silent until specifically asked. Then you must answer truthfully and not be misleading.

18 COMMENTS

  1. Good article and explanation, especially for realtors dealing with buyers. As a realtor, we have to careful not to impose our beliefs on the buyers. I remember meeting a person who had purchased a house where a prominent citizen had shot himself in his den. I asked why he had purchased the property and he smiled and said he thought he got a great deal.

  2. It’s all about misrepresentation, disclosure and negligence.

    Misrepresentation is carried out innocently, negligently or willfully. The latter category is worthy of ejection from the business on the Realtor side and it is worthy of a successful lawsuit for damages against the seller side. Negligent misrepresentation is worthy of a court case against the seller side and is worthy of censure—and a hefty fine—against an offending Realtor. Negligence is not a hall mark of professionalism.

    Disclosure is carried out, or not, based upon what the Realtor ‘and’ the seller know—for a fact—about a subject property. Failure to disclose about a known fact is punishable by whatever the law allows…because…it is a form of tacit misrepresentation. Partake in it my pretty? Get the book thrown at you.

    Negligence is carried out by anyone who cannot be bothered to get the facts…no-good lazy asses.

    In all of the above scenarios a Realtor bears the responsibility of acting professionally, ergo…honestly…based upon knowledge gleaned by one’s self and not via hearsay.

    Shari is correct; it is simply simple. A professional does not allow whether or not he/she will gain a commission to influence how professionally he/she will act in a given situation. Allow one’s self to be influenced by money by placing the value of a potential commission over one’s reputation of good will and professionalism? (If one indeed possess the foregoing attributes in the first place) Then allow one’s self to be branded a scum bag. Simple. But Realtors of no conscience do not care about such things so long as the commissions keep piling up. Just ask Terry Paranych (pre-judgement hearing/decision against him). He was a big-time successful producer, but, he warn’t no professional. He was a scum bag. Hopefully he’s not one going forward. Has he really seen the light?

    Sometimes a convert can be the most effective preacher of good will.

  3. It is 2019 or 20 years since the practice of Buyer Brokerage in Canada started yet everyone still acts like it is 1989.

    This article really only serves to confuse REALTORS ( who we know over 50% will not transact a single deal in 2019 ) who believe so many myths about the home buying process. What was it 1990 when Caveat Emptor died in Ontario? Explaining Caveat Emptor requires a full course not simply saying Buyer Beware because that no longer applies. I am assuming the mountains of case law around latent and patent defects was not deemed to valuable enough to be explained in this article.

    I am saddened to think of the families working with under a Buyer Agency agreement and believing their interests are not supported by a fully informed and knowledgeable sales person who taken the time to learn the craft of Buyer Representation.

    It is blatantly clear of the massive changes needed in the real estate brokerage agency and it is clear governments need to start protecting consumers against this one sale a year industry.

    • I am very sorry you believe this article causes confusion. I was very impressed with this decision because it was so clear and applied common sense.

      It is simple if there is anything you want to know about a property as a buyer asked. If you are asked anything as a seller answer truthfully.

    • Thank you Shari, for the article and explanation. It definitely is an emotional topic for some and people can argue their position but I agree it’s common sense. As agents we are working in our clients best interest, which means communication is key. In order for us to do our jobs effectively we must know our clients and questions must be asked. I’ve seen offers include a number of clauses very clear the buyer does not want to purchase a home with a death, murder etc and not only has the buyer agent asked the question but they clearly put it in the offer so there is no misunderstanding. Simple communication from the buyer and truthfulness on the sellers part will avoid litigation and make for happy clients.

  4. Scenario : Realtor has buyer under contract and buyer purchases a home with recent brutal multiple homicides .Buyer in question has nightmares after moving in home and being made aware by neighbors .
    Buyer sues realtor due to lack of due diligence as there buyer rep.Buyer cites Real Estate and Business Brokers Act and recent tv commercials that suggest that realtors confirm related history\neighbors etc. of properties purchased with help of A REALTOR
    Who wins lawsuit ,other than lawyers?

    • No idea who created the content for those advertisements. They are not accurate at all.

      Buyer’s agent should ask sufficient questions to know what things are important to the buyer. Not just how many bathrooms do you want. Is they anything about the house and it’s history that is important to you that you would like me to ask about? I would use a mild example of the fact you know some cultures are not comfortable if a natural death occurs at the property. Tell your client, for anything like this I need to specifically ask about it and include a representation and warranty in the agreement. This is start your conversation. Make sure you find out the buyer’s concerns not your.

  5. Becoming dead (violently or peacefully) in the “subject” house is diff than someone dying outside the house which is diff from dying not-on the real property which is diff from dying “at the hospital”. ALL of which are different from x number of people were killed in my neighbourhood in last ___ by weather/ guns/ cars/ crazed-zealots w knives etc etc

  6. Just because you don’t have to disclose doesn’t mean you can’t or shouldn’t. You should discuss it with your seller, decide at what point it should be disclosed if at all. I’ve been in this situation a few times and have disclosed and it was never a problem or impact the price or sale. Just like a leaky roof most people don’t have a problem if informed. Problems only seem to arise when they find out after the fact. True story: I sold a condo where someone jumped out the window from a 20ish floor. They were rushed to hospital and later died. They didn’t die in the unit, or on the ground outside. Regardless of the law, how would you handle this with your clients the seller?

  7. Very helpful and informative article that clarifies a grey area for us. Thanks. I’ve forearded it to the Alberta Regulator and I’m sure they’ll agree.

    • Thank you. It clears up what do you or do not have to do. Form there you decide how you want to handle it.

      I think this is all settled if every listing agents says to there clients I need to be told everything. Then explain what your disclosure obligations are. Make clear if you are asked about anything you must answer truthfully. Suggest that it is best for all parties if this is disclosed. Explain that you will protect them by not putting it in the listing but instead having a listing note that says Call before you submit an offer. That way you are only sharing with those interested and hopefully after viewing when they have already decided they want the house.

      Buyers’ agents ask your clients to make sure you know their concerns.

      If there were a murder law it would not be enough.

  8. Good summary of the case. A B.C. Court of Appeal decision is helpful, but it is not the final word on the issue. An appeal to the Supreme Court of Canada would be more helpful. It will be interesting to see if the buyer seeks leave to take the matter to the SCC. Would a buyer of the house built on the site of the Bernardo Homolka atrocities have a right to be told about the property’s history? While the case is interesting, and while I agree that buyers should be asking questions about these psychological stigma, one case does not settle the issue.
    Bill Johnston

    • This will not be going to the SCC. It would be costly and highly unlikely to be accepted.

      There are a wealth of cases. Most situations do not go to court. Laws and regulations are not required for everything.

      Simple what concerns would you have with the history of a house? Ask.

      Agents turn this into a representation and warranty that survives closing. Caselaw will not matter then any court case would be based on the language in this contract

  9. Jeffrey

    You are correct there is no requirement to disclose this except if directly asked. The judge said the same. If there was a requirement to disclose this then what else is required to be disclosed and where do you draw the line.

    In this case the realtor did not say I am not permitted to disclose the reason for the sale. The realtor provided the response he was provided and knew to be true that the daughter was changing schools and they were moving closer. After the sale the buyers believed that answer was not the real reason and if they were told about the murder they would not have purchased the house.

    This statement was tested and proven to be true. They did not ask the followup question “Why is the daughter changing schools?”.

    This case was about two things. What are you required to disclose and misrepresentation. The judge held there was no obligation to disclose the murder and the reason given for the move when asked was true and not a misrepresentation.

    Shari

  10. Having been a Realtor for a very long time, my experience tells me, if asked a direct question as to whether there has been a death in or on the property, I firmly believe there is no need to respond as to why the Seller is selling. We are actually prohibited in Ontario to answer how much the Seller will accept, or, the reason for the sale, or am I incorrect on this.

    A death does not fall under patent or latent defects, so my answer is always “we are not permitted to answer that question in Ontario”. It usually does not go any further, however, if someone asked a direct question, then they get a direct and truthful answer, no matter how damaging the resulting answer may be.

    Your comments are invited and thank you.

    Jeffrey Joseph, Broker
    Harvey Kalles Real Estate Ltd. Brokerage, Toronto
    [email protected]

    • I concur with Mr Joseph. I am also a Realtor in Ontario and consider the reason for selling to be confidential. However, as stated if asked a direct question about the property, then a truthful answer is required.

      • The disclosure issue should not be confused with whether you can ask why a person is selling or not? This case is about whether you have to say whether a murder occurred or not. The lower court case was based on when asked about the reason for sale, whether that question should have been asked or answer, was the answer given truthful or were they hiding the fact of the murder.

        If you client does not want drugs to have been sold, murder, sexual assault, natural death or any other emotional situation that does not damage or make the home unfit to live in they have to simply ask and if asked the seller must answer.

        When you boil it down it is simple how you handle this in your practice is more difficult. Once you do figure it out and are comfortable you can move on to solving other issues.

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