| Subject: Is That a Haunted House You're Buying? Date: Published: 10/27/95 (145 lines of text) Source: Wall Street Journal. Copyright Dow Jones & Co. Inc. Is That a Haunted House You're Buying? By Stefan Fatsis June and Russell Sylvain's two-bedroom ranch-style house in Cripple Creek, Colo., features wood-burning stoves and the rustic ambience of this formerly rough-and-tumble mining town. So why has the century-old house been on the market for almost six years? Could it be Ed? Ed is a friendly ghost who would knock on doors, stomp on floors and open and shut drawers. For no explicable reason, other than Ed, the family dog would bark at walls and the cat's fur would stand on end. The Sylvains say they moved after 17 years not because of Ed but because the character of the mountain town changed once legalized gambling arrived. But rather than conceal the apparition, they have opted for full disclosure, advertising a "Documented Haunted House." "I said, get it out in the open," Mrs. Sylvain says. "Maybe there's people who enjoy ghosts." Other homeowners aren't so candid about ghosts, not to mention murders, suicides or other untoward acts. These days, more and more states are freeing brokers of the responsibility of disclosing whether a property is tainted by the macabre or supernatural. New York last summer joined 28 states, plus the District of Columbia, to enact laws that generally lift the burden of disclosure from brokers representing "stigmatized" properties. The laws are designed to balance a seller's privacy rights with a buyer's right to know. The effect is that buyers must investigate a house's past and decide whether they would be spooked by it. "If you say all responsibility for disclosing any myriad of things rests with the seller, perhaps you end up with buyers who aren't giving enough consideration to what's important to them," says Don Savage, a lobbyist for the New York State Association of Realtors. Stigmatized properties are defined as ones that bear no physical defects but have a lower value or are more difficult to sell for emotional or psychological reasons. Typically, those reasons include murder, suicide, other crimes and natural death. Haunted houses generally aren't mentioned in the law, but can be considered stigmatized. In addition, federal law bars unsolicited disclosures that an occupant has or had AIDS. In states lacking disclosure protection, the National Association of Realtors advises brokers to evaluate whether certain information would affect a purchase. "If the answer is yes, then you better disclose," says Laurie Janik, the association's general counsel. If homeowners refuse to disclose something that might be material, the association advises agents to give up the listing. The more prominent the case, the more likely that disclosure will be automatic. In some cases, buyers already know of a property's sordid past. As prospective buyers walked through the door, "What I did was to say, `Have you heard about the incident that occurred here?'" says June Scott, a Beverly Hills, Calif., real estate agent who sold the house where the Menendez brothers killed their parents in 1991. "If they did not, then I said there was a murder." Depending on the state in which they work, many agents are influenced by the small body of case law surrounding stigmatized properties. In contrast to the legislative trend, legal decisions have favored disclosure. In the most influential case to date, in 1983, the California Supreme Court ruled for a homebuyer who sued her broker because she wasn't informed about the murders of a woman and her four children there a decade earlier. The court ruled that "blemishes of real property which are not physical defects or legal impairments to use" can affect resale value and should be disclosed. The California state legislature later passed a law forcing brokers to disclose a murder at a property up to three years after the crime. The law requires no disclosure for suicide, natural death, felony or the HIV-status of a current or former occupant. Ghosts bedeviled the other major legal case on stigmatized property. Helen Ackley had boasted about the presence of spirits in her 18-room Victorian house in Nyack, N. Y., publicizing it in local newspapers and writing about it in Reader's Digest. But when she agreed to sell the place in 1989 to a New York City couple, Mrs. Ackley neglected to mention the ghosts. When the buyers learned about the alleged haunting before closing on the deal, they wanted to back out. Calling the sale "a most unnatural bargain," a New York state appellate court said the seller had to disclose the reputed presence of the ghosts. The court canceled the contract and returned most of the buyers' deposit because "the most meticulous inspection would not have revealed the presence of poltergeists at the premises or unearthed the property's ghoulish reputation." The house later sold for less than its asking price. Under the new New York law, a broker is obligated only to relay questions about a property from a buyer to a seller. It's up to the seller to decide whether to make a disclosure. Ghosts are invisible under the New York law (which nonetheless was dubbed the "ghost bill"). PAGE 2 "Anyone with a haunted house is going to have to talk to his or her lawyer to figure that one out," says Mr. Savage, the lobbyist. "That's the advice we're giving brokers." Crime is a far more common issue. Sometimes a home's notoriety can attract buyers. Other times it can hinder a sale. The Menendez house was |
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