Selling a Home With Skeletons in the Closet

Aug. 26 -- Helen Ackley saw dead people.

Three dead people, to be precise. She claims they visited her in her Nyack, N.Y., home: two female ghosts — both of whom wore hoop dresses — and a male ghost, who wore a Revolutionary War uniform.

Nevermind that the house was built in the late 19th century and the American Revolution occurred a century prior, Ackley insisted her guests were very real; she even wrote about them for both Readers' Digest and a local newspaper.

Some Nyack residents thought Ackley's houseguests were a product of her imagination, but the buyer of her home, Manhattan transplant Jeffrey Stambovsky, took the ghosts very seriously.

He ended up suing Ackley and her realtor Richard Ellis for failure to disclose the "phantasmal reputation" of the home before he had agreed to buy it in 1989 for $650,000 with a $32,500 down payment.

Full Disclosure?

In theory, disclosure laws are supposed to protect home sellers from buyers' lawsuits and inform the homebuyer of any physical defects that could hurt the value of the home.

Many states, however, have taken disclosure laws a step further, requiring home sellers to disclose any "stigmas" attached to the property. (A stigma could include a nearby women's shelter, pesky ghosts, if it had been the scene of a violent crime, or even if the home seller had AIDS.)

But what most buyers forget is that the broker is actually working for the seller.

Legally, sellers should disclose all "material facts" (a euphemism for physical or non-physical problems with the house, such as whether it is built on the site of an Indian graveyard or that the last five owners all died mysterious, horrible deaths) about a house, they don't always.

The reason for skating over a house's unpleasant history is, of course, that such information might drive away some buyers and soften its fair market value.

In some states, such as California, disclosure laws have a statute of limitations. For example, buyers must be informed of a "material fact" about the house if it occurred within the past three years.