Selling Haunted Houses Involves Concerns for Lawsuits Alleging Failure of Disclosure

Question: Do sellers need to disclose if a house is haunted?

Answer: While there may be little risk of legal action for claiming a house is haunted, sellers should prioritise full disclosure to prevent potential issues down the line. Providing transparent information during the sale can protect against reputational damage and ensure a smoother transaction.

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

On the issue of proper disclosure within realty transactions, the law in Canada appears clear that the seller has a duty to disclose to the buyer any latent defects in the property that may pose a danger or make the house uninhabitable.  This rule was established by the Ontario Court of Appeal in the case of McGrath v. MacLean et al., 1979 CanLII 1691.

In regards to failing to disclose that a house is haunted, in the 1784773 Ontario Inc. case, it was determined that whereas the haunted house statements were made jokingly and whereas the buyer was unable to provide proof that the house was haunted, the case was dismissed.  Accordingly, whether would find a seller liable if evidence of paranormal activity was available remains unknown.  In another legal dispute regarding a haunted house, the case of Manitoba Free Press v. Nagy, [1907] S.C.R. 340, was reviewed by the Supreme Court of Canada following allegations of that a newspaper for published an article containing suggestions that a vacant house was haunted.

Summary Comment

Although the likelihood of being sued for spreading rumours that a house is haunted is unlikely, sellers, among others, are best to avoid the risk of a legal hassle by providing full disclosure when selling a property. Subsequently, avoiding the spread of rumours about the property is wise.