May 2008

How do you sell a haunted house?

How would you go about selling a home with a scandalous past? Do you have to tell prospective buyers about a home’s regrettable history even if it has no connection to the building’s structural integrity?

We are talking about ‘character flaws’ in real estate. In other words, features of a property which are not apparent in the physical structure, but which might lower its value or make it less enjoyable to the buyer. A typical example is where a house has been the scene of a murder.

Just how much do you have to say, if anything?

Bizarre as it may seem, this issue has already been addressed by an Australian court.

In 2004, a NSW teenager named Sef Gonzales murdered his entire family with a baseball bat. The family home was put on sale. The intending buyers did not learn of the murders until after the contract was signed. They refused to settle. Eventually the house sold to different buyers for 10% less than the originally agreed price.

The agent was disciplined by the NSW Office of Fair Trading for contravening the rules require agents to act ‘honestly, fairly and professionally’ with all parties.

Similar provisions exist in Queensland so it is very likely that a similar result would occur here.

Silence may also amount to misleading or deceptive conduct under the Trade Practice Act.

The Australian case law is slim, but American cases indicate that, in a Gonzales-like context, an agent’s failure to warn a buyer about psychologically “tainted” property would be grounds to crash the contract.


Peter Carter
Property & Commercial Partner

However, the issue of sellers’ privacy with respect to their property’s detailed history could be an issue, and agents may be torn between their duty to disclose reasonable features and detractions on the other hand and the sellers’ entitlement to privacy on the other. There is no privacy issue however if the unpleasant history of the property does not relate to the current seller or the current seller's family.

Should you have any queries regarding any conveyancing or property issue, email Peter Carter or call him on 3210 3409.

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