A Haunted Case and a Comedic Court

by Orly Lobel

I am preparing for my first consumer law class next week and one of the first cases keeps cracking me up. It is one of the cases where a guy comes to a small town, buys a house, and finds out the house is haunted; in fact, the house had been haunted for years, as the seller enjoyed bragging about to the neighbors. Yet the seller failed to mention the fact to the buyer and the court holds that the buyer is entitled to the equitable remedy of rescission. What makes me laugh is obvious delight the court is experiencing with a case about ghosts before it.  Here is a taste of the court's analysis of the problem of paranormal discovery:

While I agree with Supreme Court that the real estate broker, as agent for the seller, is under no duty to disclose to a potential buyer the phantasmal reputation of the premises and that, 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 downpayment. 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. Therefore, the theoretical basis for granting relief, even under the extraordinary facts of this case, is elusive if not ephemeral.

"Pity me not but lend thy serious hearing to what I shall unfold" (William Shakespeare, Hamlet, Act I, Scene V [Ghost] ).

From the perspective of a person in the position of plaintiff herein, a very practical problem arises with respect to the discovery of a paranormal phenomenon: "Who you gonna' call?" as the title song to the movie "Ghostbusters" asks. 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 on an inspection of every home subject to a contract of sale. It portends that the prudent attorney will establish an escrow account lest the subject of the transaction come back to haunt him and his client — or pray that his malpractice insurance coverage extends to supernatural disasters. In the interest of avoiding such untenable consequences, 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.

The case is Stambovsky v. Ackley, 572 N.Y.S.2d 672 (N.Y. Sup. Ct. App. Div. 1991) and can be found in forthcoming Third Edition of Consumer Law Cases and Materials, by John A. Spanogle, Ralph J. Rohner, Dee Pridgen, and Jeff Sovern, Thomson/West 2007.