The Real Estate Council of Ontario has warned a real estate agent for not telling a home buyer that a baby had drowned accidentally in the home’s bathtub before she bought the home.

When a real estate agent shows a home they are required to disclose material facts, but whether a murder, death or a crime in the home constitutes a “material” fact is a long-debated subject in the real estate world. Unlike latent or patent defects (visible defects like broken windows or hidden defects like a tendency of the basement to flood seriously ever spring) a stigmatized property (one where a murder or suicide has taken place, sometimes referred to as a  “psychological defect”) does not affect the safety of the homeowner and won’t cost them money. It is merely a stigma, or an uncomfortable living situation for some people, while others could not care less. Any financial cost to the buyer (such as deciding to move) is the buyer’s own decision. The home buyer in the case above is asking for the fees associated with her stigmatized home’s sale and the purchase of another in small claims court.

We’ve written before that there is no real legal obligation for a real estate agent to disclose such events happening in a house – but ethically, they should according to the Real Estate Council of Ontario. RECO’s decision said, “This information was known to you; therefore you knowingly made an inaccurate representation with respect to the trade and your conduct was unprofessional as a result.”

It is in an agent’s best interest to disclose everything they can to a home buyer so that the home buyer doesn’t become upset later on after the transaction is finished. However, there is only so much a real estate agent can do if they don’t know the full history of the home. And with the age of some of Toronto’s houses, it’s very likely someone has died in many of the homes around the city – natural deaths aren’t reported to police, and many people live out their whole lives in one home.

Would you buy a house where a crime was committed, or where a death occurred?

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