“Oh I Forgot to Tell You…”

Picture this, you have just taken possession of your dream home. You did your due-diligence; the property passed the home inspection with flying colours and your research shows the neighbourhood is safe and has great schools. You are chatting with a new neighbour only to find out that your brand new home was once the site of a violent crime or a drug operation, or that it is thought to be haunted! Would this bother you? What can you do? Did the previous owners fail to disclose something that they were legally obligated to?

When selling a home, known physical defects must be disclosed by the listing agent. A home inspection should spot any that are unknown to the seller which gives buyers confidence in the property they are purchasing. Where this gets complicated though is when you consider other non-tangible factors for which the term “stigma” is used. “They describe it as a non-physical, intangible attribute of a property that may elicit a psychological or emotional response on the part of a potential buyer.”  The key to this is that there is nothing physically observable or measurable with this; stigma is based on something that may have happened in the home in the past.

What Falls Under Stigmas?

There are many examples of events that may be bothersome to potential buyers but are not legally necessary to disclose. They can include:

• A death in the home (natural, suicide, or murder)
• The belief that the home may be haunted
• If the home was once frequented by gangs or drug dealers
• If the home was once the site of a brothel
• If the home was once the site of a meth lab or grow op (unless there is an actual latent defect from the home’s prior use for drug production)

What can you do to make sure that you know everything you want to know?

If certain stigmas concern you, there are steps you can take to try to find out as much as possible about a property before purchasing it. But keep in mind, none of these methods can be completely accurate especially if you are concerned about events that may have occurred outside of recent memory.

• Go to housecreep.com and search the address. This website is essentially a free database that compiles news stories and first hand personal experiences by address. It has quite a few addresses in Ottawa with information attached to them so it’s worth a look. It lists violent crimes, ghosts, suicides, and drug operations among other things. You can also search by neighbourhood with their map function which is helpful if you are looking at multiple properties.

• If a death in the home is an absolute deal breaker for you for cultural or personal reasons, you could also consider adding a clause to the Agreement of Purchase and Sale “that the vendors would declare to the best of their knowledge that no death had occurred in the home”. This clause would obviously make no guarantees, especially in older homes, as the current sellers may be unaware of situations that happened generations before; but if they are aware of something and fail to disclose it, they could then be held liable.

• Ask the neighbours! Don’t be afraid to knock on a few doors. The neighbours may be more forthcoming with information or they may have been around longer than the sellers.

Ultimately, as the buyer you are responsible for doing your due-diligence. There is no way for the seller to know what will be of concern to a potential buyer. If this is something that would bother you about a home, make sure to take the time to find out what you can.

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Source: Blog