The New York Supreme Court, Appellate Division, (1991) ruled that a house, which the Owner had previously advertised to the public as “haunted” by ghosts, legally was haunted for the purpose of the act of rescission brought by a buyer, Jeffrey Stambovsky, which was under contract for the home.
Ackley, the Seller, had previously reported ghosts and poltergeist activities to Reader’s Digest and local newspapers at least on three occasions. between 1977 and 1989, when the house was included on a five-home walking tour of the city. She reported to the press on several instances in which the poltergeists interacted directly with members of her family. She claimed that grandchildren received “gifts” of baby rings, all of which suddenly disappeared later. She also claimed that one ghost would wake her daughter, Cynthia each morning by shaking her bed. She claimed that when spring break arrived Cynthia proclaimed loudly that she did not have to wake up early and she would like to sleep in; her bed did not shake the next morning. Neither the owner, Ackley, nor her real estate broker, Ellis Realty, revealed the haunting to Jeffrey Stambovsky, the Buyer, before he entered a contract to purchase the house in 1989 or 1990. Stambovsky made a $32,500 good faith deposit on the agreed price of $650,000 for the house. Stambovsky was from NYC and was not aware of the stories of Nyack, including the widely known haunting story.
When the Buyer spoke with neighbors and locals and learned of the haunting story, he boasted how he was a non-believer. However, when he told his pregnant wife, he filed an action requesting rescission of the contract of sale and for damages and fraudulent misrepresentation by the Seller and their Realtor. Due to the fact that the house made his wife nervous and she shouldn’t have to live in the home. The Buyer did not attend the closing which caused him to forfeit his Earnest Money Deposit. The New York Supreme Court dismissed the action and the Buyer appealed.
In the beginning of the process 3 out of 5 majority “having reported [the ghosts’] presence in both a national publications… and the local news… defendant can not go back and deny their existence. The fact that the house was really haunted or not affected its value.
The court dismissed the “fraudulent misrepresentation action” and stated that the realtor was under no duty to disclose the haunting to potential buyers. So there were not damages to the buyer, Stambovsky because New York, at the time adhered to property law doctrine of “caveat emptor” (Buyer Beware, which is currently adhered to in Virginia).
The appellate court reversed the decision regarding the rescission action, as it said “haunting” was not a condition that a buyer or potential buyer of real property can be able to tell upon inspection of the property. Although the doctrine of caveat emptor would normally operate to bar a rescission, causing the Seller to have no duty to disclose the information about the property to be sold *but also keeping the seller from misrepresenting the condition of the property:, The court the merged law and equity system, which changed to do justice to both parties. No matter how thorough the inspection of the property there was no way to tell the presence of poltergeist or reveal the property’s ghoulish reputation in the community. This allowed the Buyer, Stambovsky a right to rescind his contract. The court stated that the Seller took advantage of the Buyer’s ignorance and it was something that the normal “Buyer” wouldn’t even ask about. The court felt that it was very appropriate to release the “unwitting” purchaser from the consequences. The judge said jokingly, “the Seller promised the Buyer that the home would be vacant, evidently this was not the case…”
The next buyer of the home sold it for $900,000 fair market value. The last time the home sold in 2016 the home sold for $800,000 above the comparable homes in the Nyack market.
This case was famous because it brought about a property being “stigmatized”. It varies from State to State but in New York a Seller is not required to reveal that the property is haunted, unless the Buyer asks.
So basically Stambovsky, got his deposit back of $32,500 but increased the homes value due to the publicity it caused…no benefit to himself. Not sure what the moral of this story is but I found it very interesting.
I would like to acknowledge the following sites for my research:
Episode 13, Season 14 of “Mysteries at the Museum” aired on 5/11/17