Haunted By Property Disclosures? Who You Gonna Call?

Does the Seller need to tell the Buyer that the house is haunted?

Almost all states require the Seller to make disclosures about the property and known issues on standard state disclosure forms. None require the disclosure of non-corporeal residents on the property.

What about Georgia? There is no uniform seller's disclosure form mandated by law.?The Georgia Association of REALTORS? (GAR?) provides a Seller's Property Disclosure Statement and a Seller's Disclosure Statement of Latent Defects and Fixtures Checklist. These forms are highly recommended to protect the Buyer and the Seller but they are voluntary. If the Seller will not provide a disclosure statement, the Buyer must choose whether or not they want to proceed with an offer on the property. Even if the Seller does not provide a property disclosure statement, they must still disclose latent defects to the Buyer. Latent defects are defects which are not discoverable during a routine inspection. Neither the current definition of latent defect in Georgia, nor the questions asked on the GAR? disclosure statements, address the paranormal.

What about a death, violent or natural, in a home in Georgia? There is no requirement to disclose and the law specifically protects Sellers and their real estate agents from any requirement to volunteer this information. Sellers and their real estate agents must answer truthfully to the best of their knowledge if they are asked. If one of these incidents are a deal breaker for the Buyer, they need to ask before going under contract or during any due diligence period that would give them the ability to terminate for personal reasons.

The haunted house issue was litigated in one state and the judges were not afraid of spectral jokes.

In the now-famous 1991 "Ghostbuster Case" (Stambovsky v. Ackley), a New York court advised that you cannot tell everyone your house is haunted and then fail to tell would-be Buyers who were new to the area. The court held that the Seller could not claim there were no ghosts since the home was part of a ghostly walking tour and the paranormal activity was reported in local press and in the Reader's Digest in an article for which Mrs. Ackley was paid $3000.00. The publicity surrounding the paranormal activity in the house was ruled to affect the property's current value and potential resale value. While the Buyer could not get damages from the real estate agent or the Seller for misrepresentation, the court allowed the Buyer to rescind the sale.

Best quotes from the case:

• "... in his pursuit of a legal remedy for fraudulent misrepresentation against the seller, plaintiff hasn't a ghost of a chance, I am nevertheless moved by the spirit of equity to allow the buyer to seek rescission of the contract of sale and recovery of his down payment."
• "... a very practical problem arises with respect to the discovery of a paranormal phenomenon: 'Who you gonna' call?'"
• "Applying the strict rule of caveat emptor to a contract involving a house possessed by poltergeists conjures up visions of a psychic or medium routinely accompanying the structural engineer and Terminix man ..."
• "... the notion that a haunting is a condition which can and should be ascertained upon reasonable inspection of the premises is a hobgoblin which should be exorcised from the body of legal precedent and laid quietly to rest."
• (In the dissent) "... if the doctrine of caveat emptor is to be discarded, it should be for a reason more substantive than a poltergeist."

What are the terrifically chilling takeaways from this case?

• When the Buyer feels the Seller has failed to disclose something that would have impacted their decision to buy, the agent is often pulled into the dispute. In many cases where the Buyer files a suit, the agent was sued in addition the Seller. In Stambovsky v. Ackley, the real estate agent's brother was an attorney and was able to present the agent. Most real estate agents are not that lucky.
• AVOID HE SAID; SHE SAID A/K/A GET IT IN WRITING! In later interviews with the daughter and the agent related to Stambovsky v. Ackley (podcast links below), both claimed that the Buyer was aware that the Seller believed that the home was haunted. The agent related that the Seller would not accept the offer until she was sure the Buyer was made aware of the ghosts in the home. The agent stated that he called the buyer and told him and that the Buyer laughed in response. The court did not address the potential that there was a verbal disclosure at all in the case. Anything potentially relevant needs to be disclosed in writing pursuant to the notice requirements in the contract. In GAR? contracts, that requires that the Notice be in writing, signed by the party giving Notice, and delivered in person, via tracked delivery, by fax or by email to an email address included in the contract for Notices. Failing to follow the notice requirements of a contract will mean that the court cannot consider the communication when making a decision under the Statute of Frauds.
• One person's negative impact is another person's selling point. The haunting did, in fact, have an impact on the property's value but it was the opposite of what the court surmised. There was a flood of offers on the property due to the publicity of the court case.

Fun resources if you love the haunted topic:

And have a happy and safe Halloween!!

Cheryl King - [email protected]

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