Stambovsky Discussion

Stambovsky v. Ackley

Supreme Court, Appellate Division, New York, 572 N.Y.S.2d 672, 169 A.D.2d 254 (1991).

When will a buyer of a house that is allegedly haunted have the right to

rescind the deal?

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Facts

Jeffrey Stambovsky signed a contract to buy Helen Ackley’s house in Nyack, New York.

After the contract was signed, Stambovsky discovered that the house was widely reputed

to be haunted. The Ackley family claimed to have seen poltergeists on numerous

occasions over the previous nine years. The Ackleys had been interviewed about the

house in both a national publication (Reader’s Digest) and the local newspaper. The

house was included on a walking tour of Nyack, New York, as “a riverfront Victorian

(with ghost).”

When Stambovsky learned of the house’s reputation, he sued to rescind the contract,

alleging that Ackley and her real estate agent had made material misrepresentations when

they failed to disclose Ackley’s belief that the house was haunted. Ackley argued that she

was under no duty to disclose to the buyer the home’s haunted reputation. The trial court

dismissed Stambovsky’s case, and Stambovsky appealed.

Issue

Was the failure to inform Stambovsky that the house was supposedly haunted a material

misrepresentation that would allow him to rescind the contract?

Decision

Yes. The New York appellate court found that the seller did have a duty to disclose. The

court allowed Stambovsky to rescind the contract.

Reason

Ackley and her family had created the house’s reputation as haunted and had profited

from that reputation over a number of years. That reputation harmed the resale value of

the home, however. Because the Ackleys had created the impairment and knew that it

was not likely to be discovered by a purchaser from out of town, they had an obligation

to disclose it. They should have brought the impairment to the attention of all prospective

buyers, including Stambovsky. Even though the Ackleys did not actively mislead

Stambovsky, they allowed him to sign the contract knowing that he was unaware of the

home’s haunted reputation. Because they unfairly took advantage of his ignorance, they

could not enforce the contract.

Critical Thinking

● Ethical Assuming that Ackley’s behavior was unethical, was it unethical because

she failed to tell Stambovsky something about the house that he did not know, or

was it unethical because of the nature of the information she omitted? What if

Ackley had failed to mention that the roof leaked or that the well was

dry—conditions that a buyer would normally investigate? Explain your answer.