Ghostbusters Case

1 Laveta Place in Nyack NY is a 4628 square foot Victorian with five bedrooms, four and a half baths, three levels and a half acre of land.  Located on the Hudson River, it has great waterfront views.  Nyack is a small town across the river from Tarrytown and next to the Cuomo Bridge (which replaced the Tappan Zee bridge a few years ago.)

The house had been vacant and was in disrepair when the Ackleys moved into the waterfront home in the 1960s. Local children purportedly warned them that the house was haunted, though no prior paranormal incidents appear to have been published.

Helen Ackley and members of her family basically bragged about the fact that their Victorian home at 1 Laveta Place in Nyack NY was haunted.  Ms. Ackerly reported the existence of numerous ghosts in her home in Nyack both to Reader’s Digest and a local newspaper on 3 occasions between 1977 and 1989.  The house was even included as a haunted home in a five home walking tour of the city.

Helen Ackley claimed there were at least three ghosts in the residence (all of whom seemed friendly.) She described two as a married couple who had lived in the 18th century and the other as a Navy Lieutenant in the American Revolution. In 1993, she was contacted by paranormal researcher Bill Merrill and medium Glenn Johnson, who claimed to have already made contact with two of the spirits at 1 LaVeta Place. The pair met with Helen and disclosed that the couple were likely the poltergeists of Sir George and Lady Margaret, who lived in the region in the 18th century. In 1995, Merrill and Johnson published a book about their findings entitled Sir George, the Ghost of Nyack.

In 1989 Ms. Ackley listed her home for sale with Ellis Realty.  There is some dispute as to what happened afterwards. According to some, Ellis Realty revealed the haunting to a buyer, Jeffrey Stambovsky, after he signed the contract and made a $32,500 downpayment on the agreed price of $650,000.  Ellis made the revelation because Ackley would not sign her end of the contract until after the haunting was disclosed to the buyers. The broker telephoned Stambovsky and advised him of Ackley’s claim, and he laughed and said, “we’ll have to call in the Ghostbusters”, a popular movie at the time.

As a realtor, I think – He should have gotten the buyer to acknowledge the notification in writing! 

The broker then told Ackley that Stambovsky had been advised of the hauntings and the seller signed her end of the contract of sale. Although the broker and the seller told the court this sequence of events, Stambovsky claimed he was never advised of this.    Since Stambovsky was from New York City, he was not aware of the haunting story even though it was well known in Nyack.  (Remember this is pre-Google.)

About one week after the contracts of sale were fully signed, Stambovsky met at the property with the seller directly to discuss the “ghosts”. After hearing about the haunting directly from the seller the buyer filed an action requesting recision of the contract of sale and for damages for false misrepresentation by Ackley and Ellis Realty. Stambovsky did not attend the closing, which caused him to forfeit the downpayment (although he was then not obligated to buy the house).

A NY trial court dismissed the action because of the property doctrine of Caveat Emptor (buyer beware.)  However, the court did note that : “having reported [the ghosts’] presence in both a national publication… and the local press… defendant is estopped to deny their existence and, as a matter of law, the house is haunted.” The court noted that regardless of whether the house was truly haunted or not, the fact that the house had been widely reported as being haunted greatly affected its value.  Notwithstanding these conclusions, the court dismissed the fraudulent misrepresentation action and stated that the realtor was under no duty to disclose the haunting to potential buyers. Thus, no damages were available to Stambovsky, because New York, at the time, adhered to property law doctrine of caveat emptor.

On appeal, the trial court’s decision was reversed. The appellate court noted that “haunting” was not a condition that a buyer or potential buyer of real property can and should be able to ascertain upon reasonable inspection of the property. According to that court, though the doctrine of caveat emptor would normally operate to bar a rescission action, causing seller to have no duty to disclose information about the property to be sold (but also preventing the seller from affirmatively misrepresenting the condition of the property), the doctrine, in a merged law and equity system, can be modified to do justice to the parties. 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;” thus equity would allow the buyer to rescind the contract.

When buying a home, the buyer has a responsibility to do his or her own due diligence but the court in the Ghostbusters case in the 1990s drew the line at ghost detection.  In these days where it seems that everything is known because of Google and the wider internet search capabilities, would due diligence be so narrowly defined?

This case highlights the need for buyers to google the address of any home they are interested in – and the name of the owner – to make sure they know everything they can about the property.   Whether and what a listing agent must disclose depends on the laws in the state where the property is located concerning stigmatized properties – and that might not include information that you want to know as a buyer.