Select Page

Does a recent B.C. Supreme Court decision change disclosure requirements?

I recently wrote about whether murders, suicides or haunted houses needed to be disclosed to a buyer. My answer for the most part in Canada was no. We now have the case of Wang v Shao, out of the B.C. Supreme Court, released on March 9, 2018. Has this case changed my opinion or the law in Canada? The answer continues to be no. Here’s why:

What happened in the case?

The seller bought the home at 3883 Cartier St. in Vancouver in 2003. She lived for the most part in China. Her daughter, son-in law and their children resided in the property. The son in-law was murdered outside the front gate of the property in November 2007. There was speculation that he was part of a notorious biker gang.

The seller decided that because she no longer wanted to live in Canada, and since her granddaughter would be changing schools, she wanted to sell the property. Her daughter acted as her Power of Attorney to take care of the sale on her behalf. In 2008, the house was listed but the listing expired. It was relisted in 2009 and sold. At the time the offer was negotiated, the buyer asked why the seller was selling. The buyer was told the reason was that the daughter was changing schools. Nothing was mentioned about the murder. A few days after the offer was signed, the buyer learned about the murder and refused to close, claiming she feared for her family’s safety.

What were the issues?

The main issues were the following:

  1. Did the seller have a duty to disclose the murder to any buyer?
  2. Was the murder a material latent defect, permitting the buyer to cancel the deal?
  3. Did the seller commit a fraudulent misrepresentation by not disclosing the murder after being asked why she was selling?
What were the findings of the judge?

In this case, the agents for the seller asked in advance for advice as to whether the murder should be disclosed and were advised that only if they were asked about it did they have to tell the truth. The judge said it appeared the mother did fear for the safety for her daughter and grandchildren after the murder of her son-in-law and this likely was one of the reasons that she wanted to sell. The judge also noted that the daughter was later arrested in 2010 in Hong Kong for money laundering.

After going through caselaw from Canada, the U.S. and even Australia, the judge concluded that a murder is not a latent defect that needs to be disclosed to a buyer. In fact, the judge said this could even have been a patent defect, since the buyer could easily have found this out by just Googling the property address on the internet, even in 2009.

However, the judge said that when the buyer asked why the seller was selling, the seller committed a fraudulent misrepresentation by saying the reason was that the daughter had to switch schools and that they should also have disclosed about the murder as well, since she was concerned about her family’s safety. By not disclosing this, they induced the buyer to buy this property and the buyer could rely on this to cancel the deal.

Does this case change the law for sellers or real estate agents about disclosure?

In my opinion the answer is no. This case does have unique facts. I find it a little odd that the judge found that the buyer placed such importance on the question, “Why is the seller selling?” when that is a question almost every buyer asks, since most buyers place far more weight on things like location, price and condition of the home. In this case it was important since the murder apparently was one of the main reasons why the seller was selling. That is not the case with most stigmatized properties.

I repeat the lessons to be learned about this issue from this important case:

  1. If you are a representing a buyer and have any concerns, just insert a clause in your contract that the seller represents and warrants that there have been no murders or suicides on the property. Speak to the neighbours as part of your research and remember to Google the property address, just in case.
  2. If you are representing a seller, while you are not legally responsible to disclose psychological stigmas, be careful about how you answer any question that is asked. We live in a country where people from all over the world want to come and live, and for many cultures, a murder or suicide would likely make the home uninhabitable for them. If you are selling to a single mother with one teenage daughter, should you disclose that a convicted rapist lives across the street? Is it worth the legal costs of fighting these cases in the future or is it better to just disclose and sell the home to buyers who do not care about the history of the property?