Stigmatized properties are those in which there is nothing objectively wrong with the physical premises. However, due to the history of the property, it has a negative experience associated with it. This could include properties in which murders or suicides occurred, or those which have been described as being haunted.

The fluid nature of the law sometimes can make commentary on a topic difficult. I try to stay away from any contentious declarations of the law on these types of posts, because it so hard to police how people interpret these articles, and how it is important to encourage people to get proper legal advice than to become their own google lawyer… and then I did this:

Buy with Brin Video

In short, if you can ignore all the pizza pop eating, I say, with all the waivers about how you can’t rely on my commentary as legal advice, that you don’t need to disclose those things that ‘stigmatize’ properties, like hauntings or murders.

A week after that video was shared, a BCSC decision dealing with a gang-related shooting at a residential property that was being sold is rendered. It told me I was wrong, at least to an extent. The trial judge voided a contract for misrepresenting that the reason for selling the property was related to a gang murder, not for the change of school of the owner’s children, as described.

Some small measure of vindication was recently obtained. Earlier this year, the BC Court of Appeal reconsidered that decision, and overturned the decision. The BC Court of Appeal in Wang v. Shao, 2019 BCCA 130 (CanLII) waded into the interesting waters of stigmatized properties. The relevant facts are as follows:

• Owner was a family member of an occupant who was shot at the front door of the property. Occupant was involved in gang activity, and murder was related to gang activity.
• Owner never disclosed death, or any of the details around it. Told the potential buyer that the reason for the sale was that daughter was changing schools. (which was true, in part)
• Buyer removed conditions. Buyer found out about the murder and elected not to proceed with the purchase of the property.
• Owner later sold the property to a third party, and at that time disclosed the death and details around it.

Some of the relevant analysis:
A review of case law suggested that dangerous defects include a number of physical components with an objectively identifiable defect to it. In considering a property in which a suicide occurred, a Quebec court noted:

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

However, following that decision, Quebec specifically required disclosure of suicides on their disclosure forms.

The Court of Appeal, like the trial judge, determined that this type of death did not constitute a latent defect in the property. It was not a hidden defect that needed to be disclosed by the inherent stigma that it left on the property. The Court of Appeal disagreed on the analysis around fraudulent misrepresentation.

The trial judge determined that the reason that the contract should be voided was one of fraudulent misrepresentation. In short, the buyer had asked why the seller was selling, and was advised that it was due to a change in schools. While a half truth, it lacked some of the full details for the departure. The trial judge determined that the five part test for fraudulent misrepresentation was met.
The Court of Appeal disagreed. Some of the more interesting comments:

If Ms. Yuan were under a duty to disclose why her daughter was going to school in West Vancouver, why she was not going to public school, and why she had left her previous private school, the law relating to real estate transactions would be turned on its head. Imagine, for example, the following situations:
1. An owner wishes to sell and when asked why, replies that she is getting a divorce. Is she also required to disclose that her husband often assaulted her in their bedroom? Or why he assaulted her? Or that she has been committing adultery with another man?
2. An owner wishes to sell and when asked why, replies that she is moving to a different city. Is she required to explain that she is moving to a different city because she has been fired from her job? Must she say she was fired for defalcation of funds? Or that she stole in order to pay gambling debts? Or that her children have been bullied by teenagers next door?
3. An owner wishes to sell his house for a long list of reasons, including as #10 on the list that he dislikes his neighbours (who are always wanting to borrow his tools) and as #15 on the list, that his late wife died there five years before. When asked why he is moving, he replies that “It’s time for a change.”

As long as this was an honest answer, there was no need to disclose all reasons.  If the purchaser wanted to know if any specific stigmatizing effects were present, they needed to ask a specific question about the same.

The doctrine of caveat emptor is not intended to permit sellers to deceive buyers. It is a principle that recognizes that if buyers were required to disclose every possible feature relating not only to the physical and extrinsic qualities of their properties but also to all possible sensitivities and superstitions buyers might have, there would be no end to the resulting litigation. The doctrine places on the buyer the onus of asking specific questions designed to unearth the facts relating to the buyer’s particular subjective likes and dislikes. The answer given by the plaintiff’s agent to Ms. Deng’s question (that the daughter needed a better chance to practice her English) was an honest answer as far as it went, and in my opinion she was not required to supplement it with a description of the entire chain of events that led to the enrolment of the plaintiff’s granddaughter at the new private school — unless the buyer asked specifically why the girl had been at a public school or whether any violent deaths had occurred during Ms. Wang’s tenure of the property.

They allowed the appeal, and remitted the matter back to trial judge to determine damages based on finding that the contract was not voided.