RESEARCH OR REGRET?

Should homebuyers be warned about a property’s dark past?
By Douglas Quan 
Postmedia News June 20, 2013

Want to know if that property you’re eyeing might have been the site of a murder or suicide? Be prepared to do your own digging, real-estate experts say.

While laws and regulations require sellers and realtors to disclose physical defects of a property that may be hidden from view, there is nothing that legally requires them to disclose so-called “stigmas” attached to a property. Same goes for landlords when dealing with prospective renters.

The lack of regulation in this area was highlighted Monday by the revelation that the apartment suite once occupied by Luka Magnotta, the Montreal man accused in the high-profile killing and dismemberment one year ago of university student Lin Jun, had been rented out.

It was unclear if the tenant was aware of the suite’s dark past, The Canadian Press reported. “We don’t advertise it, obviously,” building superintendent Eric Schorer told the news agency.

Mark Weisleder, a real-estate lawyer and author in Toronto, said provincial disclosure rules need to be more explicit, especially given the number of Canadians whose cultural backgrounds may make them more sensitive to property stigmas. “Because news like this could affect someone’s decision to buy or rent, my advice would be why wouldn’t you disclose?” he said.

Most appraisers will tell you that an unnatural death that occurs in a home will have an impact on that property’s value, he said.

Weisleder advises people who are interested in a home to do searches of that address online for any related news stories. He also advises knocking on neighbours’ doors to get the scoop on any problems that may have occurred there.

“Usually, you’ll find a talkative neighbour,” he said.

Homebuyers, who are suspicious, should straight-up ask sellers whether there has ever been a murder or suicide on the property and get them to put the answer in writing as part of the offer.

One Ontario couple, Eric and Sade-Lea Tekoniemi, reportedly bought a home last year in Bowmanville only to discover that it was the scene of a double homicide 15 years earlier. They subsequently sued the former owners, the selling agent and the real-estate firm in a case that is still before the courts.

Pierre Leduc, a spokesman for the Canadian Real Estate Association, acknowledged Monday that disclosure requirements across Canada fall into a “grey area.” Homebuyers are best off to hire an expert who knows the right questions to ask and can guide them through the process, he said.

A bulletin issued in March by the Real Estate Council of Ontario encouraged agents to have “full and frank” discussions with sellers and that if stigmatizing issues associated with a property exist, agents should advise sellers to “seek legal advice regarding their rights and obligations related to the issue, and get written instructions regarding the disclosure of the stigma to buyers.”

Agents representing buyers should have detailed conversations with buyers about what issues they may be sensitive to and “be prepared to do some additional investigation or research,” the bulletin said.

The bulletin suggested that a home could be considered to have a stigma if it was used in the ongoing commission of a crime, such as drug dealing; a murder or suicide occurred at the property; the property was previously owned by a crime boss; or if there were reports the property was haunted.

Amy Spencer, president and CEO of the Rental Housing Council of B.C., which represents landlords and property managers in the province, suggested Monday that given the differing interpretations about what constitutes a stigma, it might be difficult for lawmakers to spell out what needs to be disclosed.

She said landlords should be given discretion over what information to disclose, as they need to balance privacy interests of previous tenants with the health and safety concerns of future tenants.

But if asked pointed questions about a property’s past, landlords do have an obligation to be truthful, she said.