I recently mentioned that I’m house hunting to someone and they suggested that I ask my salesperson about “stigmas”. What were they referring to?

In the context of real estate, a “stigma” is an intangible characteristic of a property that may evoke a psychological or emotional response on the part of a potential buyer. There may have been an event or circumstance that occurred in or near the property that does not affect the property’s appearance or function; however, it may impact the comfort level someone has toward living in a particular home. Individual responses to something that may be considered a stigma are subjective. What one potential buyer may see as a factor that eliminates a home from their consideration, another may not.

Examples of circumstances that may contribute to a psychological “stigma” may include:

    • the property was the scene of a major crime;
    • the property was previously owned by a notorious individual;
    • there was a suspicious death on the property;
    • there are reports that the property is haunted; or
    • a former grow-op that has been remediated according to the local health or building authority.

 
There is no legislation or case law in Ontario to suggest that a seller or their representative is required to disclose a condition that may be considered a stigma. Ontario buyers, under the legal doctrine of caveat emptor (buyer beware), are ultimately responsible for ensuring that the property is suitable for their needs.

As mentioned above, stigma is all about perspective – what one person might find completely unacceptable may not be of any concern to another. I recommend discussing your specific needs or concerns with your real estate representative. You should carefully consider how you feel about purchasing a home that may, from your point of view, have a stigma attached to it. Speak with your salesperson or broker and your real estate lawyer so that they can ensure the necessary inquiries are made to avoid purchasing a property you will not feel comfortable living in.

The Real Estate Council of Ontario (RECO) recommends that real estate professionals and buyers practice due diligence in researching any possible stigmas that may impact a buyer’s decision in purchasing a home. This may include asking direct questions of the seller or the seller’s representative, researching the property on the internet or speaking with local residents.

In some situations, a salesperson may address a buyer’s concern about one or more stigmas by including in an offer a representation or warranty that speaks to the stigma. For example, the buyer may submit an offer that includes a warranty by the seller that to their knowledge, there have been no circumstances around the property that could give rise to the stigma in question.

Your real estate representative and real estate lawyer can help you decide how to proceed. Ultimately, taking a proactive approach will ensure that you have all the information you need to make a decision that is right for you.

Good luck in your search.

If you have a question for Joe about the home buying or selling process, please email information@reco.on.ca.

 

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Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.

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