Most U.S. states require sellers to disclose information regarding a property’s condition and potential physical defects. Some states also require the disclosure of emotional defects to encompass suicide, murder, reported paranormal activity and sometimes proximity to homeless shelters.
In California, for example, sellers do have to disclose emotional defects, but only in a very limited way. The state Civil Code requires that a death on the property only need be disclosed if it occurred fewer than three years prior to the sale and older incidents need be addressed only if the prospective buyer asks.
This former boarding house then private residence built in the 1900s was purchased by George and Helen Ackley in the 1960s. After moving in, the Ackleys claimed to experience brushes with the otherworldly.
”He was sitting in midair, watching me paint the ceiling in the living room, rocking and back forth,” she said. ”I was on an 8-foot stepladder. I asked if he approved of what we were doing to the house, if the colors were to his liking. He smiled and he nodded his head.”
Helen believed this aforementioned gentleman to be Sir George, wife of Lady Margaret. The couple lived in the area during the 18th century. In addition to this couple, Helen asserted that there was another ghost in residence, a Navy Lieutenant from the American Revolution.
Time moved on. George passed away and Helen elected to retire in Florida. She put the house up for sale through Ellis Realty for a cool $650,000. A bond trader from New York City, Jeffrey Stambovsky, and his wife Patrice put in an accepted offer accompanied by a $32,500 down payment. The property’s ghostly reputation was not disclosed to them.
Upon learning of the house’s haunted past, Stambovsky filed an action requesting rescission of the contract of sale for damages for fraudulent misrepresentation. In his words, he had been the victim of “ectoplasmic fraud”.
A New York Supreme Court dismissed the action so Stambovsky appealed. The Appellate Court reversed the trial court in a narrow 3 to 2 decision. Justice Israel Rubin wrote the majority decision.
“’[A] very practical problem arises with respect to the discovery of paranormal phenomenon: ‘who you gonna call?’ as a title song to the movie Ghostbusters asks. Applying the strict rule of caveat emptor to a contract involving a house possessed by poltergeists conjures up visions of a psychic or medium routinely accompanying the structural engineers and Terminix man on an inspection of every home subject to a contract of sale. In the interest of avoiding such untenable consequences, the notion that a haunting is a condition which can and should be ascertained upon reasonable inspection of the premises is a hobgoblin which should be exorcised from the body of legal precedent and laid quietly to rest.’”
Rubin went on to say that he was moved “by the spirit of equity,” into deciding with the Stambovskys in this particular case concluding,
“Where, as here, the seller not only takes unfair advantage of the buyer’s ignorance but has created and perpetuated a condition about which he is unlikely to even inquire, enforcement of the contract (in whole or in part) is offensive to the court’s sense of equity. Application of the remedy of rescission, within the bounds of the narrow exception to the doctrine of caveat emptor set forth herein, is entirely appropriate to relieve the unwitting purchaser from the consequences of a most unnatural bargain.”
The Stambovskys never moved to 1 LaVeta, but the case generated considerable publicity. Fifty some prospective buyers surfaced among them Kreskin, a renowned mentalist who was interested in purchasing a haunted home in which to curate his collection of paranormal paraphernalia.
Mrs. Ackley sold the house to a buyer other than Kreskin and moved to Florida in 1991. Twelve years later, she passed away and her son-in-law believes that her spirit has taken up residence back at 1 LaVeta Place. He made no such claim about George!