Do You Need to Tell a Buyer Your House Is Haunted?

10/30/2015 04:17 pm ET Updated Oct 30, 2016

So you want to sell your house, but it is haunted and you are worried that will dissuade potential buyers. You may be tempted not to tell them. Heck, most people don't believe in ghosts anyway, right? Believe it or not, that strategy did not work out for a seller in New York.

I am a real estate agent in Arizona and this topic actually came up in my real estate training class. The instructor, Marty Baum of the Chandler Real Estate Training Center, said you don't have to disclose a potential ghost, but you do have to disclose a haunting. Furthermore, he claimed this was a topic that has been debated at real estate conferences he has attended.

I wasn't sure if he was kidding or not. However, after I looked into it further I found out he is right.

Rules vary state by state, but as we learned in class, according to the Arizona Department of Real Estate, "Sellers are obligated by Arizona common law to disclose all known material facts about a property to the buyer."

A material fact is a piece of information important to making a decision.

So what the heck is Marty talking about when he says you don't have to disclose if your house may have a ghost?

According to Arizona law, when it comes to real estate sales and leases, a seller does not have disclose if the property is "The site of a natural death, suicide or homicide or any other crime classified as a felony."

Marty's point is that if someone dies in the house, you don't have to disclose that information. He is then applying some comedic liberty to translate that as you don't have to disclose a potential ghost.

However, a haunting could be seen as a material fact. Such was the case in a famous New York court case, commonly referred to as the Ghostbusters ruling.

The case was Stambovsky v. Ackley. In 1990, Jeffrey Stambovsky went to the courts to get out of a contract he had made on a house that he later found out was haunted. The house was a Victorian in Nyack, New York, just across the Hudson River from Sleepy Hollow.

According to a story in The New York Times, Stambovsky was buying the home for $650,000 and had put down $32,500. He found out about the house's haunted reputation and refused to close on the sale and wanted his deposit back.

The first ruling was not in his favor. However, he appealed and won. The case was settled in 1991, and according to an alleged accounting of the affair by Ackley's son-in-law, eventually a judge decided that they split the down payment.

The question is, why did the court overturn the original ruling?

In New York, they followed the caveat emptor rule. This means "buyer beware" and puts the responsibility on the buyer to get the house inspected for defects. However, the courts ruled that an inspection would not have discovered the haunting. Apparently, they do not carry around the little device with all of the lights on it that was used in the movie Ghostbusters to look for ghosts.

Of course, the Ghostbusters ghost hunting device does not exist, and many, perhaps most, will tell you ghosts don't exist. So, how can the courts rule the house was haunted? For this justification they looked to how the home got its haunted reputation in the first place.

Although Ackley claims there were rumors of the house being haunted before she moved there, according to Lawnix, a site of legal case briefs for law students and attorneys, "Ackley had actually perpetrated the rumor by reporting various occurrences to Reader's Digest and the local press."

Lawnix explained, "In this case, Ackley deliberately publicized that her house was haunted. Having informed the public at large that the house was haunted, she owned no less a duty to the buyer. Ackley was estopped from denying the existence of ghosts and poltergeists and as a matter of law, the house was haunted."

So whether or not the house was haunted was irrelevant. That the seller believed the house was haunted and had told others about her belief was relevant. The moral of the story is if you think your house is haunted, that could be interpreted as a material fact, so it is better to let potential buyers know.

You may be reading this while you are sitting in your home listening to moaning and phantom footsteps. Hopefully, that is just your kids fooling around or a scary movie is on. It is the Halloween season after all. However, if this is a common occurrence and you believe your house is actually haunted, take heart. If you are looking to sell your haunted house, you could turn this into a marketing opportunity.

In a recent story in Realtor Magazine, a real estate agent in Omaha, Nebraska did just that. In his listing description, instead of focusing on the great backyard or the newly renovated kitchen, he focused on the house's haunted reputation.

Unfortunately, the owners took the house off of the market before it sold. They claimed the haunting had turned violent, so they had to get out quick and decided to turn the house into a rental. However, the real estate agent says his marketing strategy created a lot of interest.

Some of the paranormal experts Realtor Magazine interviewed claimed there are people that don't mind living with ghosts. According to Ackley's son-in-law, even the Ackleys didn't mind the ghosts so much. They felt the ghosts were benevolent and looked after the family.

Getting back to Marty's joke, it is a bit ironic that, at least in Arizona, you could be living in the Murder House from American Horror Story and not have to disclose the home's gruesome history, but if you suspect your house is haunted, and especially if your home has a haunted reputation, you had better disclose that.

The good news for those trying to unload a haunted house is that some people welcome a house ghost as much as they do the house pet. That means those Halloween enthusiasts, like the ones who have their cubicles decked out this week with cobwebs and tombstones, are your potential buyers.

This blog was originally posted on my real estate blog page at EastValleyProperty.com.