In 1991, one of the more entertaining real estate cases was argued in New York. Stambovsky v. Ackley involved an out-of-town buyer purchasing a house only to learn later that the village of Nyack, New York, largely considered it to be haunted. The haunted nature of the house showed up in the Readers’ Digest, in local newspapers, and was on a haunted waterfront tour circuit. The buyer very affirmatively didn’t want to purchase the house any longer and wanted his whole down payment back too. They wanted to dip out of the transaction and sued on the grounds that the seller’s agent should have disclosed the “phantasmal reputation of the premises,” as well as the argument that, had the buyer known about the haunted nature, they would have changed the valuation and resaleability and their offer would have been different. The court noted that it’s irregular for a psychic to accompany the inspector and Terminix man to every house under contract of sale, and the notion of haunting is not something broadly respected by courts and legal scholars. The seller argued that the buyer purchased the property “as-is” and that included the hobgoblins and poltergeists, even though those were not disclosed. So far, pretty normal. Basically how people expect it.
Then a dozen pages into the case, the court throws an ectoplasmic curveball. “In the case at bar, defendant seller deliberately fostered the public belief that her home was possessed.” To the contrary, the seller profited from the haunted nature of the house prior to the sale. The court therefore found that the seller could not swap positions just because it suited them in court that day. In other words, the house was haunted, as a matter of law, if not metaphysics.
The case is largely one used to illustrate the silliness that can result from strict application of legal estoppel, but the takeaway is still good at the core: buyers and sellers cannot take advantage of the opposite party if they secretly know something that materially affects the property’s value and salability. Also, it means ghosts are legally real, specifically in New York.