Caveat Emptor and Ghosts

Among the many things I learned over the weekend, this is a gem: What happens if you buy a Victorian House and it happens to be haunted?  Can you get equitable relief from the seller?  Yes, if in New York...

 

Jeffrey M. Stambovsky, Appellant,

v.

Helen V. Ackley et al., Respondents.

 

Supreme Court, Appellate Division, First Department, New York

 

July 18, 1991

SUMMARY

 Appeal from a judgment of the Supreme Court (Edward H. Lehner, J.), entered April 9, 1990 in New York County, which dismissed the complaint pursuant to CPLR 3211 (a) (7).

 

HEADNOTES

 Equity--Rescission--Contract to Purchase House Reputed to be Haunted--Estoppel to Deny House is Haunted--Inability to Learn of Condition of House Prior to Executing Contract

 (1) In an action seeking rescission of a contract to purchase a house widely reputed to be possessed by poltergeists, a grant of equitable relief is warranted where the buyer, not a "local" and unfamiliar with the local folklore, could not readily have learned that the home he had contracted to purchase was haunted. Whether the source of the spectral apparitions seen by defendant seller is parapsychic or psychogenic, having reported their 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. It was defendant's promotional efforts in publicizing her close encounters with the spirits which fostered the home's reputation in the community, and the impact of that reputation goes to the very essence of the bargain between the parties, greatly impairing both the value of the property and its potential for resale. Moreover, the extent of that impairment may be presumed on a motion to dismiss and represents merely an issue of fact for resolution at trial.

 

 Fraud--Factual Misrepresentation--Duty of Real Estate Broker to Disclose to Buyer That House is Reputed to be Haunted

 (2) A real estate broker, as agent for the seller, is under no duty to disclose to a potential buyer that the premises in question has a reputation for being haunted, and a buyer may not pursue a legal remedy for fraudulent misrepresentation against the seller on the grounds that the premises is haunted. New York law fails to recognize any remedy for damages incurred as a result of the seller's mere silence, applying instead the strict rule of caveat emptor.

 

 Equity--Rescission--Contract to Purchase House Reputed to be Haunted--Inability to Determine if Premises is Haunted upon Reasonable Inspection

 (3) In an action seeking rescission of a contract to purchase a house widely reputed to be haunted, a grant of equitable relief may be warranted since a haunting is a condition which cannot be ascertained upon a reasonable inspection of the premises. For the purposes of the instant motion to dismiss pursuant to CPLR 3211 (a) (7), plaintiff purchaser is entitled to every favorable inference which may reasonably be drawn from the pleadings, viz., that he met his obligation to inspect the premises and search the title, and, therefore, there is no sound policy reason to deny plaintiff relief for failing to discover a state of affairs which the most prudent purchaser would not be expected even to contemplate, defendant being estopped from denying that the house is haunted.

 

 Equity--Rescission--Contract for Sale of Real Property--Merger Clause--House Reputed to be Haunted

 (4) In an action seeking rescission of a contract to purchase a house widely reputed to be haunted, nondisclosure of that reputation constitutes a basis for relief as a matter of equity where the condition was created by the seller, it materially impairs the value of the contract, and it is peculiarly within the knowledge of the seller or is unlikely to be discovered by a prudent purchaser. The merger or "as is" clause in the contract does not bar recovery since even an express disclaimer will not be given effect where the facts are peculiarly within the knowledge of the party invoking it. Moreover, a fair reading of the clause reveals that it expressly disclaims only representations made with respect to the physical condition of the premises and, thus, its effect does not extend to paranormal phenomena; should the contractual language be construed as broadly as defendant seller urges to encompass the presence of poltergeists in the house, it cannot then be said that she has delivered the premises "vacant" in accordance with her obligation thereunder.