Selling Haunted Houses Involves Concerns for Lawsuits Alleging Failure of Disclosure

Question: Are sellers legally obligated to disclose if a house is haunted?

Answer: While it's unlikely a seller will face legal action specifically for a haunted house, full disclosure about the property's conditions is wise to avoid potential disputes. Providing transparency can protect against risks associated with stigmas affecting property values, as highlighted in McGrath v. MacLean, [1979 CanLII 1691] and 1784773 Ontario Inc. v K-W Labour Association, [2013 ONSC 5401].

Is a Seller Legally Required to Tell a Buyer That a House Is Haunted?

Although It Is Unlikely That a Seller Would Be Sued Subsequently Spreading Rumours That a House Was Haunted a Seller Can Best Avoid Hassles By Providing Full Disclosure to Buyer and Refraining Making Comments That May Stigmatize the Property.

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

In the case of 1784773 Ontario Inc. v K-W Labour Association et al, 2013 ONSC 5401, a seller was subsequently sued by the buyer when the seller spread rumours that the house was haunted and that such was a detail the seller failed to previously disclose to the buyer.  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.