Selling a home is one of the largest financial decisions you’ll make. The process becomes even more challenging when the property carries a stigma. The biggest challenge in selling a stigmatized home is that stigmas are inherently subjective. What’s an absolute deal-breaker for one buyer might not affect another buyer’s decision at all. That’s exactly why it’s so important to know when and how to disclose a stigma, even if you personally don’t think it’s a big deal.

Me and Janette always believe in being forthright with any potential stigma. If you think it might upset someone, chances are there’s someone who could be upset by the fact. So bite the bullet and disclose, disclose, disclose. There’s always someone willing to buy your home.

We categorize stigmas into two categories: physical stigmas and pure stigmas.

Physical Stigmas (Latent Material Defects)

These are homes stigmatized because of an actual physical condition like termites, mold, lead paint, asbestos, urea-formaldehyde foam insulation (UFFI), or arsenic-tainted lumber. The land itself can carry a stigma too: some properties have decades-old oil tanks that may have leaked into the soil, while others sit on land once used for something like a leather tannery generations ago.

In legal terms, these fall under what’s called a latent defect. That’s a defect that isn’t reasonably discoverable through a routine home viewing or standard inspection, but that carries a health risk or materially impacts the property’s value. This is different from a patent defect, which is visible or obvious on a normal walkthrough (a cracked window, a stained ceiling). Sellers generally aren’t required to point out patent defects, since a reasonable buyer is expected to notice those themselves.

However, Sellers are legally required to disclose known latent material defects (lead, asbestos, buried oil tank etc). That said, there are situations where a seller genuinely doesn’t know about a hidden defect, and a buyer only discovers it during a later renovation. In these cases, the seller may not be held liable for failing to disclose something they were truly unaware of, but if a judge determines a reasonable homeowner in that situation would have known, the buyer may have a case to recover remediation costs.

Two Examples

Example one: You buy a home, and during the first rainfall, the basement carpet gets wet. You call the listing agent, who says the previous owner considered this normal and simply used a dehumidifier. This is a material latent defect that should have been disclosed before you made an offer, even if the sellers weren’t certain of the exact cause, there was clearly evidence of an ongoing issue (in this case, a foundation crack).

Example two: You purchase a century home and complete a home inspection, which shows copper wiring in the panel. The sellers say they bought the house a few years ago and never touched the electrical. A few months in, you go to update a light fixture and discover live knob-and-tube wiring still exists behind the walls. This is a material latent defect, but since the previous owners were genuinely unaware of it, they likely can’t be held liable for failing to disclose something they didn’t know existed.

A Note on Grow-Ops and Illicit Drug Production

One specific latent-defect scenario worth calling out on its own: former marijuana grow operations or homes used for synthetic drug production (such as fentanyl). Even after a grow-op or drug lab is remediated, these properties can carry serious lingering issues:

• Electrical systems that were bypassed or dangerously overloaded.

• Structural damage and mold caused by intense indoor humidity.

• Chemical residues embedded in drywall, flooring, and HVAC ductwork.

Some insurers specifically ask whether a property was ever used as a grow-op or illegal lab, and it can affect both insurability and resale value well after the fact. If you know or suspect your property has this history, this is a vital conversation to have with your real estate lawyer before listing.

Pure Stigmas

These are properties where something troubling happened, but there’s no physical damage to the home itself. They include a death, a suicide, alleged criminal activity, or anything else a buyer can’t see but that could affect their willingness to buy.

Many buyers are surprised to learn that Ontario sellers are not legally required to disclose whether someone died of natural causes or died by suicide in a home. However, a seller cannot misrepresent the property or lie if directly asked. Furthermore, if a death was tied to a violent crime, murder, or criminal activity, the line between non-disclosure and legal liability becomes dangerously thin.

The Case That Pushed the Boundaries: Gilgeous-Alexander v. 1223408 Ontario Limited

A recent, closely watched Ontario case shows just how far “pure stigma” disclosure obligations can extend when safety or security is compromised.

In 2023, NBA player Shai Gilgeous-Alexander purchased a Burlington mansion for roughly $8.4 million. The home had previously been rented by Aiden Pleterski, a self-described “Crypto King” facing fraud allegations from investors. Before Gilgeous-Alexander’s purchase, but after Pleterski had moved out, the property had repeatedly experienced threatening visits from people looking for Pleterski. The sellers listed the home describing it as “private and secure.”

Ontario Superior Court Justice Robert Centa ruled that this description amounted to fraudulent misrepresentation, since the sellers knew about the ongoing safety concerns and failed to disclose them. The judge voided the sale entirely and ordered the sellers to buy the home back, along with covering the mortgage and insurance costs Gilgeous-Alexander had paid during the dispute.

This case matters because it shows that “pure stigma” linked to the safety of a home is enough to unwind a multi-million dollar transaction.

What Should Be Disclosed When Selling a Home?

Generally, disclosure is legally required for a hidden flaw or issue that can’t be identified during a routine inspection. There’s no single exhaustive list, it’s up to you, your lawyer, and your agent to use common sense when to disclose:

• Hidden water damage or active foundation leaks

• Structural integrity issues

• Hazardous electrical or plumbing problems

• Environmental hazards (mold, asbestos, UFFI, lead, toxic residue)

• Soil contamination or buried oil tanks

• Termite or structural pest infestations

Legal or zoning issues affecting the property must also be disclosed, including:

• Proposed easements or encroachments that can’t be found through a standard title search

• Proposed zoning restrictions or municipal work orders

• Outstanding or missing building permits

• Any active legal disputes related to the property

• Future construction that could impact the enjoyment of the property

What Doesn’t Need to Be Disclosed? (And How TRESA Changes Things)

This is genuinely a tricky area, and one your real estate agent must navigate carefully alongside your lawyer. On December 1, 2023, Phase 2 of the Trust in Real Estate Services Act (TRESA) officially replaced the older Real Estate and Business Brokers Act (REBBA).

Under TRESA, real estate agents have explicit obligations regarding property facts: Agents are expected under TRESA’s new code of ethics to disclose anything that could influence a buyer to avoid purchasing a property. This is a significant shift from RECO, who only suggest agents and their clients discuss potential stigmas with their lawyer, and prepare disclosures if necessary.

This puts pressure on any seller looking to benefit from the services of a realtor to disclose more than they would normally legally be required to do so.

For Buyers: How Do You Find Out About a Stigma?

If you’re on the buying side, and you want to know about specific stigmas, it’s best to just ask. A quick google search is always a great start when considering a property, but also direct your realtor to inquire about any potential sigmas or issues that you may want to know about.

Personally, we’ve had clients purchase homes from estates of deceased sellers, and the clients have asked not to be informed if the seller passed away in the home. It’s not uncommon for loved ones to pass away in their homes, and it’s almost an inevitability when looking in historic neighbourhoods where homes have lived through generations of families.

 

Our Take: If You’re Not Sure, Disclose It

Our advice to sellers is simple: when in doubt, disclose.

If a disclosure doesn’t concern a buyer, you haven’t hurt your sale in the slightest. If it does concern them, you’ve likely avoided a costly, multi-year lawsuit down the road. And if you’re dealing with a genuine “pure stigma” situation, something that doesn’t affect the physical home but might affect a buyer’s perception of it, either disclose it transparently, or obtain explicit, written legal instructions from your lawyer on how to proceed.

Frequently Asked Questions

Do I have to disclose a death in the house when selling in Ontario? No, if the passing was due to natural causes or suicide, Ontario sellers are not legally required to proactively disclose it. However, if the death was tied to a violent crime that created ongoing public notoriety or safety risks, or if a prospective buyer directly asks you, failing to disclose or lying can expose you to severe legal liability.

What is the difference between a latent defect and a patent defect? A patent defect is visible or obvious during a normal walkthrough (e.g., a broken window), and generally doesn’t need to be pointed out by the seller. A latent defect is hidden and not reasonably discoverable through a routine viewing or standard inspection.

Do I have to disclose that a home was previously a grow-op or drug lab? Yes. If you know about it, this is treated as a material latent defect due to the potential for lingering electrical hazards, structural damage, mold, and toxic chemical residues. It can also impact the buyer’s ability to get insurance, and it has a direct impact on the value of the home. If it is not disclosed, the buyers could potentially sue to undo the sale, or they can sue for the diminished value of the home.

What changed under TRESA regarding property disclosure? Effective December 1, 2023, TRESA modernized real estate rules in Ontario. It strengthened consumer protections and established strict rules requiring real estate agents to disclose known “material facts” to prospective buyers, while providing enhanced guidance on handling property stigmas through written legal instructions.

Talk to Us Before You List

Stigma disclosure isn’t black and white. If you’re preparing to sell a property with any physical or pure stigma, contact us before you list, and we’ll help you navigate the right next steps alongside your lawyer.