The Halloween season is well underway. It’s a time for spine-chilling tales and eerie encounters with the supernatural. When I am looking to scratch my supernatural itch, I don’t reach for Frankenstein or Dracula—I reach for my good old copy of the Appellate Division of the New York Supreme Court’s ruling in Stambovsky v. Ackley[1], famously known as the “Ghostbusters ruling.”
For the uninitialed, this court case from New York state blurs the line between spooky folklore and legal precedent. This case, decided in 1991, ruled that a house in Nyack, N.Y., was legally haunted and that an unaware buyer was entitled to rescission of the real estate contract.
Let’s dive into this haunting case and see why it has become one of the most memorable—and eerie—decisions in U.S. real estate law (admittedly, this is not a long list). Brace yourself: This case isn’t for the faint of heart.
The bone-chilling backstory
In the late 1980s, Jeffrey Stambovsky, a New York City resident, entered into a contract to buy a beautiful Victorian home in Nyack, N.Y. To his horror, he soon discovered that the house was reportedly haunted, with poltergeists known to the locals—and the media—for nearly a decade. The seller, Helen Ackley, had even shared her ghostly encounters in the magazine Reader’s Digest and local publications, recounting her family’s “close encounters” with spirits inhabiting the home.
Upon learning of the haunting, Stambovsky sought to back out of the sale, arguing that Ackley’s failure to disclose the house’s supernatural reputation made the sale fraudulent. He demanded rescission of the contract and a refund of his down payment. The trial court that first heard the case dismissed Stambovsky’s claim, citing caveat emptor, or “buyer beware.” In other words, the onus was on the buyer to discover the spooky secrets of the property before signing.
Back from the beyond
Of course, that is not the end of this ghostly tale. As with any good horror movie, this case had a sequel. Stambovsky appealed—the legal equivalent of a sequel—the case to the Appellate Division of the New York Supreme Court.
The ruling by the Appellate Division proved just as unconventional as the case itself. Thankfully for us, the majority opinion was written by a Justice Rubin, who clearly had fun doing so. The majority opinion contains references from Hamlet to Ghostbusters; and almost every paragraph contains some supernatural language. While the opinion probably won’t end up on the New York Times bestseller list, as far as legal opinions go, it is a page turner.
The power of equitable estoppel compels you
The court acknowledged the house’s ghostly reputation, recognizing that Ackley had publicized the hauntings and that it was common knowledge in the village of Nyack. The court states that “[w]hether the source of the spectral apparitions seen by defendant seller are parapsychic or psychogenic … as a matter of law, the house is haunted.”
The court opined that, as a nonlocal buyer, Stambovsky could not have been expected to discover this “phantasmal” history through typical due diligence. Further, even the most thorough physical inspection would have failed to “reveal the presence of poltergeists at the premises or unearth the property’s ghoulish reputation in the community.”
This is when the caveat emptor rule collided with the appellate court’s “spirit of equity.” The court wrote that while Stambovsky’s case had “not a ghost of a chance” under traditional fraud laws, equity demanded a remedy due to Ackley’s promotional efforts regarding her ghostly encounters. In a beautiful turn of legal phrase, the court stated that “[w]here fairness and common sense dictate that an exception should be created, the evolution of the law should not be stifled by rigid application of a legal maxim.”
In the present case, the court found that where a condition had been created by the seller, was known to the seller, and would be unlikely to be discovered by a prudent buyer, a seller’s nondisclosure constitutes a basis for rescission as a matter of equity. As such, the appellate division reversed the lower court’s decision and ordered Stambovsky’s cause of action reinstated.
Paranormal legal precedent
This case is iconic for its impact on property disclosure laws and the treatment of stigmatized properties. While New York state law upholds the buyer-beware principle, this decision carved out a narrow exception for properties with notoriety in the community—especially when the seller had actively promoted the reputation. The ruling sparked discussions on whether sellers should be required to disclose nonphysical “defects,” like supernatural occurrences or infamous events, that could affect a property’s value.
Despite the spooky overtones, Stambovsky v. Ackley set a serious precedent for other states to consider adopting “stigmatized property” disclosure laws, covering everything from alleged hauntings to properties associated with high-profile crimes. Today, several states have laws that require sellers to disclose if a property has a reputation that could affect its value—paranormal or otherwise.
Would this case haunt courts today?
The “Ghostbusters ruling” remains one of the few legal decisions involving a haunted house and it is still cited in discussions on stigmatized properties.
As we approach Halloween this week, it reminds us that the supernatural can make an appearance in the courtroom, challenging our understanding of property, reputation and the limits of disclosure.
[1] https://casetext.com/case/stambovsky-v-ackley
Bradford J. Lachut, Esq.
Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.
