The case is Stambovsky v Ackley.pdf It was decided in 1991 by a New York Appellate Court. Mr. Stambovsky, to his horror, discovered that the house he just bought in Nyack had undisclosed tenants. Unlike some tenants who just act like poltergeists, they were. He discovered the seller and her family had also seen them over the last nine years. In fact, Seller had publicized the ‘hauntings” to Readers Digest and the local media. The problem was that Mr. Stambovsky was not a “local” privy to this information (and probably didn’t have a local buyer’s broker). And the seller’s broker did not disclose it. The buyer sued to rescind the contract and the Court, “moved by the spirit of equity”, cast out the contract and ruled that Mr. Stambovsky’s down payment should be made to reappear in his bank account. Now, before brokers add “Is the house haunted?” to their listing questionnaire, note that this case is the exception and not the rule. The Court stated that a real estate broker in New York is under no legal duty to disclose to a potential buyer the “phantasmal reputation” of a house. Any buyer who sues for fraudulent misrepresentation in such a case would not have a “ghost of a chance” of winning, said the Court. Since the seller had publicly promoted the hauntings, she was prevented from denying the “fact” and equitable principles of law demanded she refund the buyer’s down payment for her concealment. Should a seller have to disclose this information ? Is this different from any other latent defect that would lower the value of a house ? Would you buy a house that was substantially below market value if it had such a history ?
