A lawsuit in Kitchener surrounding the sale of an office building was thrown out of court when the buyer who had complained about ghosts on the property could not provide any proof.
The lesson is that if the history of a property matters to you, whether it is murders, suicides or rumours of paranormal activity, include something in your agreement, or it will be hard to prove anything later.
Here is what happened:
In 2010, the historic building on King St. East was sold by the K-W Labour Association to a numbered company controlled by Trajan Fisca for $650,000. The property had been valued at over $1 million by the municipal assessors.
In the interview with the Kitchener-Waterloo Record, Labour Association vice president Stephen Kramer said the main reason the building sold for less than the assessed value was because it was only partly leased. He then added: “and because it’s haunted.” He later joked that people wondered whether Jimmy Hoffa was buried there, since it was an old union building.
Fisca was not amused and sued for $1 million just before the second anniversary of closing, claiming the property had a stigma which was not disclosed to him. In June, I wrote about a decision in New York State where a seller was held liable for not disclosing that his property sold was haunted, when he had earlier been paid for writing in Reader’s Digest that the same home was in fact haunted. In that case, the seller had to pay the buyer damages for not disclosing this information.
Before the Kitchener case could get to trial, the Labour Association tried to get the case thrown out of court. In August, 2013, Judge James W. Sloan agreed.
In documents entered as part of the plea, Kramer said he was only joking when he gave the interview and had no knowledge whatsoever of the property was haunted, beyond jokes heard at cocktail parties. The judge believed him.
“There is no evidence before me as to how the plaintiff (buyer) would prove the existence of a ghost,” the Judge said. He also said there wasn’t any evidence someone had died in the building, whether by natural causes or some criminal act.
The judge cited a Small Claims court decision from Quebec, called Knight vs. Dionne, where the court decided that a suicide 10 years earlier did not have to be disclosed to the buyer.
Kitchener lawyer Sebastien Winny, who acted for the Labour Association, told me the buyer tried to use the New York case noted above in support of their position. He tried to argue that the seller did have the duty to disclose his knowledge that the home might be haunted.
However, Judge Sloan ruled that while a haunted home could carry a stigma, there is no way to prove how it might affect the value of a commercial building. He did not mention any US case in his decision.
Winny also advised me that the buyer is appealing this decision.
This issue constantly resurfaces.
We are still awaiting a trial in Bowmanville about whether a double murder 15 years agoneeded to be disclosed to a buyer.
My advice is that if you know about psychological defects in a property, disclose them and avoid unnecessary proceedings later. If as a buyer you are concerned, include a clause in your contract that the seller has no knowledge that the property is haunted and that no murders or suicides ever occurred on the property.
Mark Weisleder is a Toronto real estate lawyer. Contact him email@example.com