If The House You Purchase Is Haunted, Can You Get Out Of The Contract?

Haunted houses are great for Halloween -- but not everyone wants to live in one. If you buy a house and find out later that the previous owner knew it was haunted, is there anything you can do to get out of the contract? Absolutely. This is what you should know.

Stigmatized property should be identified as such by sellers.

A property is considered "stigmatized" when it has a history attached to it that could make it unattractive to some buyers. For example, some people don't want to live in a home where a murder or suicide took place, while others might be disinclined to purchase an otherwise beautiful home if it was once a brothel. A house that's popularly known to be haunted is another type of stigma.

While the laws vary from area to area, many jurisdictions require sellers to warn a buyer if the property has a reputation for being haunted.

There is legal precedence for dealing with haunted houses.

The most famous lawsuit involving a haunted house was the case of Stambovsky v. Ackley. Helen Ackley was the owner of a home in New York that she publicly identified as haunted. She claimed that the house had both ghosts and mischievous spirits, known as poltergeists. She repeated her claims to reporters for a local paper, had her house included on a walking tour of haunted homes, and published an account of her experiences in a national magazine.

When Ackley decided to sell the house, however, she and her real estate agent neglected to mention any of this information to the buyer, Jeffrey Stambovsky. He was from outside the area and unaware of the house's reputation for being haunted.

After a series of legal battles, Stambovsky eventually won the right to rescind his contract to buy the house. The court held that Ackley had publicly held the house out to be haunted to the local and national press -- thereby making the house haunted as a matter of law. (Which meant that she couldn't demand that Stambovsky prove the haunting in order to win his case.)

While there was no law at the time in New York that obligated the seller to disclose the property as haunted, the court found that it wasn't reasonable to expect a buyer to think to ask if the house might be haunted before agreeing to purchase it.

Rescission is the usual remedy to the situation.

When a contract is found to be invalid for some reason, the usual remedy is rescission. Generally, in a situation where a seller neglects to mention that the house being sold is haunted, the courts will grant rescission based on misrepresentation.

The goal of rescission is to return the two parties involved in the contract to "status quo ante" -- or the way that things were before they initiated the contract. That means that you get back any money that you put down on the house and the seller gets back the house.

Contracts, particularly those involving real estate, can give rise to a lot of complicated issues. If you find yourself in a situation where you purchased a property that has a stigma attached -- due to a haunting or something else -- contact a local attorney for help. To find out more, speak with someone like Brandt Law Group.