Selling Haunted Houses Involves Concerns for Lawsuits Alleging Failure of Disclosure

Question: Does a seller have to disclose if a house is haunted?

Answer:   While there is no legal obligation regarding haunted status per se, sellers must disclose any latent defects that may affect the property’s value or safety.  The law, established in McGrath v. MacLean et al., 1979 CanLII 1691, indicates that failure to do so could lead to legal trouble.  Although the case of 1784773 Ontario Inc. v K-W Labour Association et al, 2013 ONSC 5401, was dismissed due to a lack of evidence, sellers should err on the side of caution to avoid rumors that could stigmatize the property.  Traffic Ticket Rescue can assist with navigating your legal disclosure responsibilities to ensure a smoother selling process.

Does the Seller of a House Need to Disclose That the House Is Haunted to the Buyer?

There Are Few Cases Involving Rumoured Haunted Houses; However, It Does Appear That the Manner In Which Rumours Are Spread May Result In Liability For Stating That a House Is Haunted and Thereby Causing a Reduced Property Value.

Understanding the Law Regarding Disclosure Obligations When Selling a House Perceived As Haunted

The case of 1784773 Ontario Inc. v K-W Labour Association et al, 2013 ONSC 5401, suggests that a seller who jokes about selling a haunted house may be subsequently sued by the buyer for failure to disclose the haunted status.  The buyer, concerned that rumours of the haunted status may cause a stigma with resulting harm in the form of reduced property values and the claim sought compensation for failing to disclosure the haunted status during the sales negotiations.

The Law

As for proper disclosure of defects or other concerns during real estate negotiations, a seller is obligated to inform the buyer of any latent defects that may be dangerous or otherwise make the premises unfit for the intended use. This law was established within McGrath v. MacLean et al., 1979 CanLII 1691, and subsequently followed by many cases.

As for the concern involving failure to disclose that a house is haunted, the court in the 1784773 Ontario Inc. case determined that as the statements regarding the haunted status were made jokingly and the Plaintiff was without actual evidence to prove that the house was actually haunted, the case was dismissed.  Of course, it is interesting to wonder what the decision of the court would be if some evidence of paranormal activity was available.  Another interesting case involving a haunted house, was the Manitoba Free Press v. Nagy, [1907] S.C.R. 340, decision of the Supreme Court of Canada which involved allegations of negligence against a newspaper for publishing an article suggesting that a vacant house was haunted and thereby causing a reduction in the property value of the house.

Summary Comment

The chances of getting sued for spreading a rumour that a house is haunted is slim, a former owner of a house should avoid spreading rumours that may adversely affect the value of the property. A seller limits the risk of legal trouble by providing proper disclosure during the selling process and thereafter keeping quiet.