I just finished carving my pumpkin, and, in the spirit of the season, I thought I would share with you a little legal horror story, which I first heard in law school.
The case in question is Stambovsky v. Ackley, 169 A.D.2d 254 (NY App. Div. 1991). The facts of the case are thus:
Helen Ackley owned a home in Nyack, New York. She and her family had repeatedly reported the home as being haunted by poltergeists. Their tales of supernatural disturbances had appeared in the local newspaper an three occassions, as well as Reader's Digest. The home was also included on a walking tour of the city of Nyack as a haunted house.
A few years later, Ms. Ackley put her haunted house on the market with Ellis Realty. Jeffrey Stambovsky signed a contract to purchase the house, and made a down payment of $32,500 on the purchase price of $650,000. Mr. Stambovsky was not from Nyack and was unaware of the spooky character the home possessed. Needless to say, when he did hear of the otherworldly haunts who were told to roam the home, he wanted out of the contract. He did not attend the closing for the sale of the house, resulting in his forfeiting of the down payment.
Mr. Stambovsky sued Ms. Ackley for the return of the down payment. The New York Supreme Court (their trial court) dismissed his action, as New York followed the property law doctrine of caveat emptor - buyer beware - and said that the seller had no duty to inform a potential buyer of the alleged hauntings. Mr. Stambovsky appealed. The appellate court reversed the decision. The appellate court said that while caveat emptor would normally bar a recission action, in this case "the most meticulous inspection and the search would not reveal the presence of poltergeists at the premises or unearth the property's ghoulish reputation in the community". While the court did not say that it believed in ghosts, because Ackley had made the claim so well known the court ruled that the house was haunted as a matter of law.
The legal term for a haunted house is stigmatized property, as it is property which buyers or tenants may shun for reasons that are unrelated to its physical condition or features. A haunted house has a phenomena stigma, but not all jurisdictions recognize this as something that needs to be disclosed. Other types of stigma include criminal stigma (where the house was a brothel or drug den), murder/suicide stigma, public stigma (where the house is famous to many people and any reasonable person can be expected to know of it), and debt stigma (where the previous owners were hounded by debt collectors at the home).
We at Taylor Legal wish you a very happy and safe Halloween!