7 Jul 2018
Should house hunters be told someone was murdered in the home they're about to buy?
By Daniel Keane and Alice Dempster
Posted yesterday at 3:00pm
"A luxurious abode in charming surrounds. Four bedrooms. Two bathrooms. One murder."
Deaths that occur inside homes create legal and moral difficulties for buyers and sellers
Different jurisdictions have different rules, but some estate agents want more clarity
A law review in Queensland is currently examining the issue
If you're house hunting, it's not the typical property advertisement you'd expect to see in a real estate guide.
But that's because real estate agents are not automatically required to tell prospective buyers about historic crimes committed inside properties — even when those crimes are particularly grisly.
Within the industry, such dwellings are known as 'stigmatised properties' because they are judged to carry baggage that makes them less desirable.
Stigmatised properties include homes where murders and deaths — or other crimes or misfortunes — have occurred, as well as houses considered to be haunted.
Disclosure about what has gone on behind closed doors is a very murky area of law, and opinion is divided on what buyers should be told.
But a stigma can also work to a buyer's advantage by driving down the price, and there are some things you should keep in mind if you are a prospective buyer.
How many people are living in 'murder houses'?
The number of murders in Australia, in recent times, has hovered somewhere around 220 each year.
Some of these crimes are committed inside homes, but it is almost impossible to estimate how many so-called 'murder houses' there are.
Adelaide real estate agent Robin Turner said he believed "literally thousands" of people across the country were, without realising it, living inside homes where people had been killed.
"Some people don't care. They just see it as bricks and mortar and a place to live. If they get a bit of a discount, that helps them," he said.
But buyer awareness about stigmatised property has been increasing in recent years, according to the Real Estate Institute of Queensland (REIQ).
"Some people seem to be disturbed by the idea of living in a property where a death has occurred," REIQ CEO Antonia Mercorella told the ABC.
"It's becoming an issue that more and more real estate agents are calling us about, wanting to understand how they should deal with it from a legal perspective."
When is it a problem?
The Sef Gonzales case in Sydney highlighted the problem buyers, tenants and sellers can face when a house that was the location of a serious crime hits the market.
In 2001, Gonzales killed his parents and sister in their North Ryde home.
Gonzales was sentenced to life imprisonment in 2004, shortly before the property again made headlines when it was sold to a Buddhist couple who were not told about its history.
In the face of media pressure, real estate firm LJ Hooker paid back the deposited sum of $80,000 and two real estate agents were fined by the NSW Office of Fair Trading.
The NSW Government said it was the "first time" such a penalty was handed out "for misleading conduct in promoting a property for sale".
The case also prompted a law review.
"What the Gonzales case demonstrates is that there does seem to be a shift happening in society," Ms Mercorella said.
"Even in relation to rental properties, it's becoming a more significant issue where tenants discover someone has died in the home and they want to be released from the tenancy agreement."
In 2012 in South Australia, the Snowtown bank — the building at the centre of the infamous 'bodies in the barrels' case — was sold to a couple who were aware of its past.
The property listing on one prominent real estate website encouraged potential buyers to "purchase a piece of Australian history", noting that the building was used as the setting for the movie Snowtown.
I warned that "illegal activities were conducted in the old bank building" and advised potential buyers to ask about "the nature of these activities prior to bidding".
However, it did not indicate that it was where eight bodies had been discovered in 1999.
What does the law say?
Property law in Australia is determined on a state by state basis, but there are similarities between state regimes.
The basic rule has traditionally been 'caveat emptor', which is Latin for 'buyer beware'.
This long-established principle means the burden is on the buyer to investigate potential flaws with a property.
"Real estate agents have both a common law and a legislative obligation to act in the best interests of their client, and that extends to getting your client the best price possible," Ms Mercorella said.
But agents also have a responsibility to reveal certain facts to purchasers, even though laws tend to be couched in general terms. What buyers get told is often a matter of interpretation.
In New South Wales, for example, it is illegal for a real estate agent to conceal a "material fact" about a property.
"But we don't know exactly what a material fact is. We've been making guesses," NSW Real Estate Institute CEO Tim McKibbin said.
"If there's a death on the property — I don't know… If there's a divorce on the property — I don't know.
"I also don't know whether or not criminal activity near the property also affects that property."
He said examples could include nearby drug labs or child sex offenders living in the area.
What should buyers be told?
In Queensland, a law review is currently examining this issue.
The state's Real Estate Institute is pushing for mandatory disclosure about stigmatised properties, partly to protect agents from potential legal action.
"Our view is that the disclosure needs to occur before a person enters into a legally binding contract," Ms Mercorella said.
"We're not saying you need to be declaring it to the world at large, but certainly before a person commits to buying."
However, Queensland University of Technology property law expert Sharon Christensen said mandatory disclosure about murder in a property could create more legal problems than it solved.
"When you put together legislation, you've got to be able to clearly define the subject matter of what you're talking about," Professor Christensen said.
"If you introduce something like this, where do you stop in terms of what you have to disclose?
"The risk that you have is that, eventually, if you have to disclose even minor types of crime, you're going to start impacting the value of property."
Professor Christensen said one way to protect yourself was to ask "a lot of questions of the agent and their legal adviser before buying", because agents have a legal duty to answer inquiries truthfully.
What if it's haunted?
Some academic papers refer to haunted houses as an example of stigmatised property. For many, it is a frivolous topic.
Professor Christensen said reported ghost cases were very rare, but typically occurred in the United States.
"That takes it to an extreme of what you would say is a stigmatised property which, at the end of the day, is really a subjective question," she said.
Real estate agent Robin Turner can't remember anyone ever asking him "about hauntings or ghosts in a very, very long career".
But frivolous or not, the issue of ghosts is one that does occasionally trouble real estate agents, Tim McKibbin said.
"We recently had a complaint lodged against an agent because [they] did not notify the tenant that the property was haunted," he said.