We have all heard about those houses – the Amityville Horror house on Long Island, the John List property in Westfield, New Jersey and the latest movie release, “A Haunting in Connecticut.” They are the houses with a stigma, a history, a murder, a haunting, something that tarnishes the home’s soul, figuratively, and some would say, literally. Yet, whether you are a believer or not, these blemishes on a home’s provenance can most definitely effect its value and reduce the property owner’s ability to unload it. On the other hand, the believers would say it adds a little flavor to your real estate.
So, what is a seller and his or her agent supposed to do? Well, that depends on what state you live in because there is no national property condition disclosure standard. Some states mandate that sellers and their agents disclose all of a home’s dark secrets – whether there was a homicide or a possible ghost siting.
California was the first state, back in the 1980s, to pass a law defining the disclosure duty of an owner and real estate agent when selling a stigmatized property. Here in New York there is no explicit statute. True, state lawmakers enacted the NYS Property Condition Disclosure Act (NYS PCDA) in 2002 but they failed to state with any specificity what happens when an axe killer goes crazy inside a house or when Casper comes a knockin’ on the bedroom door. It should be apparent, however, that the most meticulous inspection and search would not reveal the presence of poltergeists at the premises or unearth the property’s ghoulish reputation in the community.
Prior to enactment of the NYS PCDA, back in 1991, the state’s appellate court had such a ghostly matter before it in Stambovsky v. Ackley, 169 A.D. 2d 254 (1st Dept. 1991). The court held that where the seller not only alleged there were ghostly apparitions in the home but launched a national media campaign about them, she had a duty to inform the buyer because “haunting is not a condition which can and should be ascertained by reasonable inspection of the premises.” However, the court would not impute a similar obligation on the realtor, saying the broker, as agent for the seller, “is under no duty to disclose to potential purchaser a phantasmal reputation of the premises, which are reputed to be possessed by poltergeists.”
When Albany lawmakers enacted the PCDA, they gave the sellers and buyers an option to opt-out of the mandated disclosure report and instead provide the buyer with a $500 credit at closing. Ahhh, yes, the almighty dollar. I have not yet heard of a New York Case involving a stigmatized or haunted house since passage of the PCDA, but under the case of Bishop v. Graziano, 804 N.Y.S. 2d 236 (Suffolk Co. 2005), it would seem that the adage of caveat emptor, or buyer beware, will apply where the parties to a real estate deal opt out of the PCDA, unless there is a negligent misrepresentation of a latent defect, such as in the case of a haunting or curse.