Selling a Haunted House of Spooky Specters: Should Disclosures of Paranormal Activity be Required?

Bellamy Mansion in Wilmington, NC (Photo credit: Bellamy Mansion Museum)

If the topic of “ghosts” arises in a discussion regarding the field of law, it could be in reference to the concept of the dead-hand control of the deceased dictating the lives of the living in wills and estates or to the virtually untraceable firearms lacking serial numbers obtained without background checks in constitutional law.  Perhaps, though, these “ghosts” mentioned in conversation regarding the law do in fact refer to the spooky bump-in-the-night phantoms that mass media utilizes for horror movies and shows.  In which case, the conversation just might surround facts and theories on the law in connection with haunted houses and ghost tours.

Buyer Beware: We are Haunted.

First-year law students taking property law classes inevitably discover one of their discussion topics highlights “buyer beware” clauses when people buy or sell property.  Buyer beware; someone has died, maybe even murdered, in your new home and now his ghost chills the bedroom!

“Let the buyer beware” disclosures, more formally known as the Doctrine of Caveat Emptor, places a burden of reasonability unto the buyer to discover defects or faults with the property, especially when the buyer gives the seller opportunities to inspect the property.  This doctrine ultimately gives no warranties to the buyer about the property being sold.  Consequently, the buyer essentially purchases the property at his own risk.  However, a few conditions to this doctrine exist, including how the seller must not commit fraud or wrongdoing against the seller.  In such instances, where the seller fraudulently conceals material defects of the property, the seller accepts liability.

In North Carolina, statutes require sellers to take a few additional steps beyond the doctrine.  The Residential Property Disclosure Act, North Carolina General Statute Section 47E, mandates sellers to complete and send a Residential Property and Owners’ Association Disclosure Statement when selling residential property.  While a seller may circumvent warranties and guarantees in the document by replying with “no representation,” sellers must still disclose known defects, natural hazards, health and safety issues, and more.

What types of situations and circumstances do these disclosures actually cover?

A historically-preserved home framed by the bayou has been listed as for sale once again, after the buyer first listed it many years ago.  He had originally taken it off the market as being unsaleable because of the then widespread paranormal reputation surrounding the home—a reputation built on unexplainable chills in the humid summer and self-playing pianos with broken keys occurring after the death of a resident pianist.  That reputation having finally been overshadowed by other town gossip and eventually forgotten, the seller tries again.  This time, the seller has gained the interests of first-time homeowners, newlyweds, parents of five, and conglomerate-business executive officers.  The seller knows he has a duty to disclose certain categories but does not know what these categories cover.  Are deaths a known defect?  Do ghosts and other paranormal activities become natural hazards of the home and create health and safety issues?  If the seller then explains these details to the buyers, will those disclosures affect their decisions and will they understand these disclosures as warnings rather than simple facts of history?

People do take highly concerned notice.  Because they do, death, ghosts, paranormal activity, and more having occurred on or near a particular property create a different type of phenomenon called “stigmatized property” in real estate.   Stigmatized properties refer to properties, usually homes, that “buyers find undesirable due to emotional or psychological reasons,” such as the aforementioned incidences.  Some individuals refuse to live in such properties housing ghosts or paranormal activity, even when the homes’ costs have been greatly reduced.  From this refusal, the homes have become “psychologically impacted,” which in turn makes selling these properties difficult.

The Wright State University News Room in Ohio surveyed 102 psychologically stigmatized homes, which had been the locations of 46 suicides, 27 murders, and 6 acclaimed ghosts.  The report’s data showed homes were sold at an extended rate of time at 45% and at a price 3% less than homes unattached to these distressing occurrences.

Who are you going to call at the (un)sight of paranormal activity?

One New York case marked the epitome of a buyer unwilling to live in a haunted house to such an extent that the buyer called in the court system.  The buyer sued the seller for damages based on concealment of facts and to rescind the purchase contract.  In Stambovsky v. Ackley, Jeffrey Stambovsky entered into a contract to purchase Helen Ackley’s home.  At the time of contract, neither seller nor real estate agent disclosed to the buyer how poltergeists haunted the house he just bought.  They marketed the house as a normal house; thereby, additionally failing to mention the reputation of the house being purportedly haunted.  The neighbors knew, though, of the home’s paranormal reputation.  The seller and her family had reported seeing ghosts in the home over the past nine years, and the seller had even told newspapers the house was haunted.  Additionally, a walking haunted-home tour of the Village of Nyack had included the home in its tour, and a newspaper article had described the home as one with a riverfront and with a ghost.

Ultimately, the Supreme Court of New York, Appellate Division, First Department, would not award the buyer with damages on the claim of buying a haunted house based on fraudulent misrepresentation premises.  The court reasoned that the Doctrine of Caveat Emptor imposed no duty unto the seller to disclose and supply certain warranties; therefore, the seller could not be held liable for non-disclosure.

The court, however, held that the buyer could legally rescind the contract itself.  The buyer could be released from purchasing the house because the seller took advantage of the buyer’s ignorance, as the buyer did not live in the area and was not familiar with the area’s reputation.  The court believed that any inspections conducted by the buyer would have failed to reveal the ghostly veil, unless, of course, the specters decided to welcome their new owner of their afterlife residence.  Additionally, the seller could not rescind her self-imposed title of a “haunted house” from the house because the seller had previously advertised the home as a haunted house and had profited from the reputation as a haunted house.   The court officially pronounced that the house was haunted “as a matter of law,” which barred the seller from disavowing the poltergeists’ existence in the home.

Explaining the decision, Judge Rubin wrote in the opinion:

…in his [buyer’s] pursuit of a legal remedy for fraudulent misrepresentation against the seller, plaintiff hasn’t a ghost of a chance [emphasis added], I am nevertheless moved by the spirit of equity [emphasis added] to allow the buyer to seek rescission of the contract of sale and recovery of his down payment. 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.

The judge then continued by quoting not only King Hamlet’s ghost in play-fright William Shakespeare’s Hamlet but the ghouling movie Ghostbuster’s motto “Who you gonna’ call?”

The court largely based its decision in the early 1990s on how the seller could not have discovered the home’s ethereal nature.  Today, about 30 years later, however, would the court still believe the seller would be unable to uncover the home’s distressing reputation from inspections and research?  Today’s technological generation need not call the ghostbusters, but the internet.  With a few fast finger strikes on keyboards, as if we were manipulated marionette dolls controlled by ectoplasm, we have access to the internet that has data on nearly all property listings, at least of the map location.  A digital search, especially for a popular haunted house that has been reported on by news outlets that post online, occurs nearly instantly.  Social media’s gossip whirl also flies as quickly as incorporeal ghouls phasing effortlessly through any obstructions.

You, too, could be the new owner of a historically-rich house at the low price of three ghosts.

The Ackley “Ghostbusters” House itself generates thousands of results online, and the 4,628-square-foot Victorian home is once again for sale at $1.9 million.  According to Realtor.com, it is quite the picture-essence-que location for “nurturing the creative spirit and possibly harboring ghosts.”

In regards to haunted and psychologically impacted property, sellers have discovered two options after this New York ruling; (1) sellers would have grave difficulty in selling their property because they had to disclose its haunting nature under the Stambovsky v. Ackley precedent, or (2) they could market their property as a haunted house and invite guests, including paranormal hunters, onto their lands and into their buildings for ghost tours.  The latter grouping must be aware of tort claims in evaluating how safe or dangerous the house is to guests.

Residents of North Carolina, too, have commonly become roommates with the earthbound souls. Tours in old downtown Wilmington by the Cape Fear River spotlight homes, restaurants, pubs, alleyways, and burial grounds with long-standing histories of ghosts deceased long ago interfering property to make their presence known.  Adding to the thrill of ghost hunting, the tour guides in Wilmington often hold their crawls through the area at night.

Authors have even published a multitude of books on the specific hauntings in Wilmington and even in the backyard of Campbell School of Law in downtown Raleigh. In the heart of downtown, along with surrounding cities like Durham and Chapel hill, state-recognized haunted houses have staked their claims in the ground. The North Carolina Executive Mansion, only a short walk from the law school, briefly housed its first governor, Daniel G. Fowle in 1891, and later residents of the mansion believe the first governor never left after his death in 1891.

This house sees no ghosts, hears no ghosts, and speaks no ghosts; therefore, this house is not haunted…is what this house wants you to believe.

Those who do not want to market their home as a haunted house but only as a property lot for sale, may or may not find relief by subsequent court decisions and individualized state statutes.

Even while states increase regulations on what, and sometimes even how, buyers disclose information about the property to sellers, the requirement to disclose stigmatized properties remains disputed.  Should a house being the location of a tragic fire killing three family members, including a one-year-old girl, be exposed to the seller?  What of the effect on the ones this happened to now having to bear the event over again to a stranger to scrutinize and superimpose with fears of the same thing happening again to his own family?  That San Francisco home listed at 20% below its value four years later, which exceeded the three-year time-frame the city required owners to disclose deaths to buyers.  Other homes victim to physiological stigmatism, rather than being sold, have been demolished, such as Sandy Hook Elementary School in Newtown, Connecticut in 2013.

Other categories of stigmas besides paranormal activities that states differ on whether to unearth to buyers include suicides, murders, criminal activity, debt, and public intrigue.  Some states require disclosure of death only if asked, which include South Carolina, Georgia, New Jersey, and Connecticut.  States that require sellers to disclose peaceful and violent deaths occurring on the property include Alaska, California, and South Dakota.  As for murders or suicides, especially publicized ones now seen as stigmatizing the property, most states have various regulations on mandated requirements.

Disclosure relief for haunted-house owners finally arose from several states explicitly writing into their statutes that owners may not disclose parapsychological or supernatural phenomenon, also known as your friendly roommate ghost Casper or his not-as-friendly three ghost uncles.  These states include Iowa, Massachusetts, and Minnesota.

North Carolina, too, has its own stigmatized property statutes.  Homeowners or brokers of North Carolina property need only disclose material facts.  These material facts, as defined by the North Carolina Real Estate Commission, include details affecting a “reasonable person’s decision to buy.”  This borderline northern-southern state qualifies structure defects, lead-painted walls, severed oil and gas rights, locations in flood or earthquake zones, homeowners association assessments and covenants, and more as affecting a reasonable person’s decision.  In contrast, under North Carolina General Statutes Section 39-50, death, illness, and conviction of certain crimes shall not be material facts.  Therefore, any homeowners listing a house with stairs creaking at 3 a.m., chairs suddenly toppling over, kitchen lights flickering only on Sundays, radios unplugged streaming music, and one particular bedroom corner causing animals to always stare and bark at it from yards away do not have to divulge to buyers they will have supernatural roommates.  Instead, they can treat the paranormal reputation as a calm fact rather than as a spook-tacle creating added drama and mystery.

Ghost arisen in our new home, we call upon thee to rest.

When buyers purchase stigmatized property, whether or not the sellers unearthed that fact beforehand, buyers can find additional solutions to solve their ghostly or otherwise stigmatized problems. These resolutions stand apart from the court system that may take years to cast a verdict and apart from profiting by advertising their property not as a home lived in but as a haunted house with ghost tours available from nine to five on weekdays.  The new property owners, especially of “haunted houses,” can always call upon their local ghost hunters like North Carolina’s The Ghost Guild Inc. for scientifically validated proof and excitement. They can also call upon priests for blessings, or upon psychic mediums like TLC’s Long Island Medium Theresa Caputo to cleanse the home of spirits.  Maybe, like Caputo, in her interview with HuffPost, you will be the next one to “see things and think, ‘Oh my God, that was so spirit.’”

Laura Della Badia
About Laura Della Badia (2 Articles)
Laura Ashleigh Della Badia is a third-year student at Campbell University School of Law and currently serves as a Staff Writer for the Campbell Law Observer. At Campbell Law, she also hosts the Campbell Law Reporter and she is President of the Intellectual Property Law Society. She is also the recipient of the Book Award for receiving the highest grade in Copyright Law. Della Badia graduated from the University of North Carolina Wilmington magna cum laude with a B.A. in Communication Studies, a B.F.A. in Creative Writing, and the Certificate in Publishing. At UNCW, she was the news producer and anchor for Seahawk Central News, TealTV, director for the political talk show WingSpan, and secretary/treasurer for the Communication Studies Society, and she was actively involved in Lambda Pi Eta Honor Society for Communication Studies and the Association for Campus Entertainment. While she loves Wilmington and Wrightsville Beach, she is currently enjoying her hometown of Raleigh. She is passionate about the publishing industry and loves participating in the different aspects of it. She was the managing editor for the book In Our Nature: an Anthology and was on the editorial team for the Chautauqua Literary Journal. Her short story "Checkmate" and her award-winning short stories "Healing Feathers," "Escapism," and "If I Could" have appeared in various issues of the Adelaide Literary Magazine. Her short story “Scacco Matto” appeared in the In Our Nature: an Anthology book. She was also a staff writer for her high school newspaper, The Mycenaean, and recipient of the TJ Collins Creative Writing Award.