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").                                     
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"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