What Realtors Get Wrong About Stigma

Earlier this week, I made a video about disclosure requirements and stigma. 

Here’s the legal baseline in Ontario:

• Real estate transactions are governed by caveat emptor... buyer beware.
• Sellers do not have to volunteer every fact that might matter to a buyer.
• Sellers must disclose known latent defects that make a property dangerous or unfit for habitation.
• Stigma (death in the home, prior criminal activity, etc.) generally does not require disclosure unless it creates danger.
• Sellers cannot misrepresent or mislead. If asked directly, they must answer truthfully.

So knowing that, how do you protect your buyer client?

Don’t rely on voluntary disclosure, they won't always be there.

That means, you need to have the conversation. What does your buyer actually care about?

• Prior illegal activity?
• An unnatural death?
• Reputational issues?

You should be able to clearly explain what a seller does and does not have to disclose — because that tells you what needs to be addressed proactively.

Once you identify a concern, take two steps:

1. Make specific inquiries in writing. Create a record.
2. Draft it in the offer.

Use targeted representations and warranties.

For example, a clause where the seller represents, to the best of their knowledge and belief, that the property has not been used for the growth or manufacture of illegal substances. Or that there has been no unnatural death or suicide in the property.

The goal is not to turn every deal into a risk audit.

The goal is clarity.

If it matters to your buyer, it belongs in the agreement.

Latest YouTube Video:
What Sellers Don't Have to Tell You