Identifying Defects and Stigmas

The Hollywood Tower Hotel looms over the skyline; its grandeur faded, but its eerie presence is undeniable. Carmen deFoy and I, Ryan DeLuca, arrived on-site at the owner’s request, accompanied by a listing agent eager to walk us through the property.

The goal?

To assess its condition and determine whether its issues fall under material latent defects, patent defects, or stigma-related concerns.

Stepping inside, it was immediately clear that time had taken its toll. The once-grand lobby stood frozen in a bygone era, its Art Deco elegance now dulled by layers of dust and cobwebs. While much of the original design remained intact, signs of neglect were everywhere. Dim lighting cast long shadows over faded carpets, the air carried a distinct mustiness, and a general sense of unease seemed to linger.

“This place certainly has… character,” the listing agent remarked, brushing dust from a check-in ledger that hadn’t been touched in years.

Beyond the aesthetics, we quickly noted issues that could concern prospective buyers. The building’s infrastructure appeared worn, and telltale signs of deterioration hinted at deeper problems.

The walls bore cracks, moisture stains spotted the ceiling, and flickering chandeliers suggested electrical inconsistencies. While the full extent of these concerns would require a closer examination, it was clear that the hotel had seen better days.

“What I need to know,” the agent pressed, “is what actually has to be disclosed to potential buyers. The sellers, naturally, would like to keep details to a minimum.”

I nodded. “Let’s take a tour around and see what we see.”

Stepping outside, we examined the hotel’s exterior more closely. The foundation showed clear signs of distress – deep cracks snaked across the lower walls, and sections of the façade appeared to be sinking. “The owner actually had the foundation assessed recently,” the agent admitted. “Unfortunately, the report confirmed serious structural concerns. If left unaddressed, portions of the building could become unstable.”

As we further explored the outside guest corridors, we noticed uneven flooring and sections where the walls appeared slightly bowed, indicating long-term structural strain. In some areas, the tile had shifted, creating hazardous tripping points, while doors no longer fit properly in their warped frames. Water damage along the lower portions of the walls suggested that poor drainage had exacerbated the foundation’s decline.

“Some of these defects are immediately obvious,” the agent acknowledged, “but the engineering report indicated there are also shifting foundations and compromised beams hidden behind the walls. Without major structural reinforcement, these issues will only worsen over time.”

Water stains lined the ceiling, raising concerns about mould. “This place hasn’t had proper maintenance in decades,” the agent explained. “Moisture buildup has led to hidden mould growth inside the walls, which inspections have confirmed.”

One of the most concerning hidden defects is the outdated electrical system, particularly the presence of knob-and-tube wiring. This antiquated wiring method, hidden behind the hotel’s deteriorating walls, poses a significant fire risk.

“This type of wiring was common in early 20th-century buildings,” the agent explained, “but it’s not up to modern safety codes. Most insurers won’t even cover properties with active knob-and-tube systems unless they’re fully replaced.”

Adding to the concerns, much of the wiring is exposed where plaster has crumbled away, making it susceptible to further damage.

“These old wires were never designed to handle modern electrical loads,” Carmen noted. “Overheating and electrical failures are a real possibility here. Can we see the electrical panel?”

“No, it is completely rusted shut, so unfortunately, it can’t be inspected,” came the reply.

Carmen turned to the agent and said, “While some defects are obvious and visible, many of their impacts wouldn’t be identified without specialized inspections. These could be considered material latent defects. Under the Real Estate Services Act, if you become aware of a defect that meets the definition of a material latent defect – such as one that is not discoverable upon reasonable inspection, makes the property uninhabitable, or is costly to repair – you and the seller must disclose it in writing before entering into an agreement with a buyer. This disclosure must be separate from the listing agreement or the Contract of Purchase and Sale. Some of these issues appear to fall into that category.”

“Okay, that makes sense”, the agent sighed. “I had hoped it was a ‘buyer beware’ situation, but I guess in these instances, it’s not.”

Continuing our tour outside, we surveyed the crumbling façade. “As you can see,” the agent said, gesturing to the missing letters on the hotel’s sign, “the exterior needs serious attention.”

Overgrown vines crept up the walls. “It’s atmospheric,” he said with a forced smile, “but it’s also contributing to moisture retention, which accelerates deterioration.”

Perhaps the most striking defect is the missing external elevators. Nothing but burnt marks on the façade remain where two elevator towers once clung to the hotel.

“These were once a defining feature of the building,” the agent noted. “Some say they disappeared on a fateful night in 1939 under mysterious circumstances, almost as if they were swallowed by a storm.”

He hesitated for a moment before adding, “Of course, if you ask some of the longtime staff – what few remain – they’ll tell you it wasn’t just the elevators that vanished that night. But I’ll get to that part of the story a little later.”

I frowned as I looked up at the grand structure. “Without functioning elevators, how are we supposed to reach the upper floors?” I asked.

“We’ll have to go through the boiler room to access the service elevators,” the agent replied. “We can get to the boiler room from the library. Until the main elevators are rebuilt, people either have to take the stairs or use the service elevators.”

He gave us a nervous look before forcing a laugh. “I mean, they do work… most of the time.”

As we proceeded to the library, it quickly became clear that the issues in the lobby were just as apparent. The floors creaked loudly with every step, cracks in the windows let in chilling drafts, and thick cobwebs draped over chandeliers.

“This level of infestation suggests a serious pest problem,” I noted. “However, most of these issues are easily visible or can be identified by a buyer and their inspector. That makes them patent defects, which don’t require voluntary disclosure. But if you’re ever unsure whether a defect is patent or latent, it’s always best to consult a lawyer.”

As we passed through the library, the television flickered to life, its screen awash with static. A faint, eerie melody – uncannily similar to the theme from The Twilight Zone – drifted through the walls. The agent shifted uneasily. “I have no idea where that’s coming from,” he muttered, “but it happens every time we’re in here.”

As we progressed through the boiler room, the air grew thick with humidity, carrying the acrid scent of rust and stagnant water. Corroded pipes lined the walls, some leaking steadily, forming shallow pools on the cracked concrete floor.

The hulking boilers, once the heart of the hotel, stood in various states of decay, their metal casings flaking apart from years of neglect. A low, unsettling hum echoed through the space as if the building itself was exhaling a weary sigh.

“More patent defects,” I thought to myself. “I hope any buyer considering this place has a top-notch commercial property inspector,” I said.

Reaching the service elevators, I turned to the agent: “Can we take these up to see some of the rooms?”

The agent hesitated, glancing at the rusted elevator doors. “They do work,” he admitted, “but I should warn you – many believe these elevators have a mind of their own.”

“The hotel’s history is shrouded in mystery,” the agent began, his voice dropping slightly. “On a stormy night in 1939, a bolt of lightning struck the hotel’s front elevators mid-ascent, causing them – and the guests inside – to vanish without a trace.

Some say echoes of that night still linger. Visitors and staff have reported shadowy figures drifting through the corridors, their clothing clearly in the style of the 1930s. Faint laughter and distant music sometimes fill the hallways – only to fall silent the moment anyone investigates.”

He shifted uneasily before continuing. “Others believe the hotel isn’t bound by the usual rules of time and space. Guests have reported seeing people enter the service elevators, only for them to return minutes – or even hours – later, visibly shaken. And some…,” he paused, “some refuse to speak about what they saw at all.”

He hesitated, then lowered his voice even more. “There are also stories about the second floor. Even when no one selects it, the elevator sometimes stops there. And when the doors open…some guests claim they’ve seen figures standing in the hallway, surrounded by flickering, electrified streams – like they’re caught in some kind of current. These figures don’t even speak, but guests can hear strange noises around them.”

The agent let out a forced chuckle. “But of course, these are just stories.”

Yet the way his eyes darted toward the flickering lights suggested he wasn’t so sure.

“But those are just superstitious rumours and would be considered stigmas,” I objected. “In real estate, stigmas include events like deaths on the property, ghost sightings, or even alleged portals to other realms – things that may not affect the building’s physical condition but can still make buyers uneasy.”

The agent sighed. “Stigmas don’t have to be voluntarily disclosed to buyers; however, if asked, sellers and their agents must either provide a truthful response or refuse to answer. I do hope I am not asked about these rumours. Whether legend or reality, a property’s reputation can impact marketability.”

Carmen and I exchanged uneasy glances before I finally asked, “Why would you even want to list this hotel?”

Silence.

We turned back to where the agent had been standing – only to find nothing but empty space. The air felt heavier, and the flickering lights cast restless shadows along the walls. A cold chill crept through the hallway as if the hotel itself had swallowed him whole.

Then, from deep within the corridor, we heard it – the unmistakable clang of the service elevator doors sliding shut.

Carmen and I didn’t wait to investigate. We turned and left, stepping quickly through the decayed halls and out into the night, vowing never to return.

We never heard from the seller or the agent again.

In fact… no one ever did.

The Hollywood Tower Hotel is a case study in real estate challenges. With major structural, electrical, and foundation concerns, it harbours significant material latent defects. The visible deterioration, from the faded façade to rusted fixtures, presents an array of patent defects. And, of course, its ghostly past leaves it with an undeniable stigma.

Would we recommend purchasing?

Only to the bravest investors – those willing to undertake extensive restoration, navigate historical notoriety, and perhaps coexist with a few long-term, unseen tenants.