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Recently I read a blog post about a Realtor advising a Seller to not disclose the fact that there was a ghost in the home. The Seller told the Realtor that she had a “friendly” ghost. The Seller said: “He’s harmless. He only moves things around, shuts off lights and turns the pictures off center, but he’s never done anything bad. He just lets me know he’s here .
The Realtor didn’t want to hear this so she told the seller: “keep that to yourself if you want to sell your house and trust me, plenty of people don’t want to live in a home where someone took their own life and is now “rumored” to be a ghost!”
The Realtor was giving wrong advice. Her statement admits that the presence of a “ghost” is a "material fact" which will affect a Buyers decision. She also made the probable mistaken assumption that a person took their own life in that home. She has no way of knowing where the ghost died, nor how it died.
Let’s fast forward, and assume the Seller heeded the Realtor’s advice and did not disclose that there was a ghost in the house. Just scroll on down a little past the friendly ghost in the photo.
Mr. and Mrs. Buyer loved the home and bought it for full listed price. After moving into the home, the Buyers were told about the “ghost” by the neighbors. The Buyers were frantic; they did not want to live in a house with a ghost. So what is their natural course of action? File a law suit against the Seller, the Realtor, and the Realtors Brokerage firm for failure to disclose a “material fact” that would have affected their decision to buy or not buy that house." The result would most likely be that the Buyers would win the case.
Why was that Realtor, and the Realtors responding to Kristine’s blog making the error of not disclosing?
Some say there is no requirement to disclose a ghost. Well, as hard as I search, I cannot find anything in the Arizona disclosure law, nor the Sellers Property Disclosure Statement, that states that “ghosts” are not required to be disclosed. So, what leads people to the assumption that a ghost need not be disclosed?
In Arizona, it does state that a death on the property does not have to be disclosed. Therefore, I believe what is happening is, the Realtors are assuming that the ghost died in the home, and since a death is not required to be disclosed, they deduce that a ghost need not be disclosed.
The problem with that deduction is twofold:
The alleged “ghost” may not have died on that property. Perhaps there was never a death in that home. Therefore this ghost cannot be attached to the “no requirement to disclose a death in the home”. This is an alleged ghost who has apparently risen from the grave and is currently active in that home. It's a completely different issue from a death in the home.
The ghost is “active” in the home. Whether or not we believe in ghosts, it is apparent from the Seller's statement that this ghost is reaching out from the grave and calling attention to itself for some reason. In Kristine’s blog, the ghost is very active. It moves things around, shuts off lights, and puts pictures off center, in order to let the Seller know it is there.
Now let’s examine a portion of the Arizona Sellers Property Disclosure Statement form, instructions on the first page:
Item (6) Other Conditions and Factors: “These blank lines provide space for you to disclose anyother important information concerning the property that might affect the buyer’s decision-making process, the value of the property, or its use, and to make any other necessary explanations.”
This is an all encompassing statement. It very clearly states “any other important information concerning the property that might affect the buyer’s decision-making process”. Wouldn't it be logical to assume that an active ghost in the home would be an important piece of information concerning the property that a Buyer would want to know before making a buying decision?
Remember this ghost may not have died anywhere near this property. And at least in the mind of the Seller the ghost is very real.
We know that many buyers will be freaked out in a house with alleged or real ghosts.
Others may seek out a home with ghosts.
In either case, the presence of an alleged ghost is “important information concerning the property that might affect the buyer’s decision-making process.”
Are you still one of the believers that a “ghost” does not have to be disclosed? Well keep reading…..
There is a famous case in New York (Stambovsky v. Ackley, 169 A.D.2d 254 (NY App. Div. 1991)) This case is discussed with attorneys in law school, and any time a case of non-disclosure of ghosts comes up, the attorneys will look to this citation.
In this famous case, the Seller had reported the house being haunted in national publications, and in local news; and the home was featured on a local ghost tour.
The Seller did not disclose this to the Buyer.
In 1990, she sold the home for $650,000 to a buyer from New York City who had not heard about the house being haunted. When he learned it was haunted he canceled the sale and sued to get his $32,000 down payment back.
The Court found that whether or not the house was haunted was not the issue, since even the reputation that a house was haunted may affect its value. The Court found that the law at the time did not require the seller to disclose the haunting on the theory of “buyer beware,” which places the burden on the buyer to inspect the property to ascertain the condition of the property they are purchasing. However, the court found that a normal inspection would not uncover the ghosts that allegedly haunted the home. Consequently, the buyer won the case.
The Holding and Rule of the case was:If a seller knows of a condition that is unlikely to be discovered by a careful and prudent buyer, and impairs the value of the contract, nondisclosure of this condition represents a basis for recission under equity.
Remember, this is not about a death on the property.
This is about the existence on the property of a poltergeist.
It was my opinion when reading the blog that a “ghost” could not be tied to the non-requirement to disclose a death on the property. That’s because the ghost may not have died on the property, and at this time the ghost is allegedly being active in the home and making its presence known by its actions. However, to be certain, I felt it best to consult with a real estate attorney on the matter.
The attorney I consulted with on this question provided the case citation, and said that an alleged ghost must be disclosed. He further said that, no matter how bizarre this may sound, if the seller has experienced aliens from other planets attempting to kidnap him/her from the home, but not at any other place, then that is a material fact which must also be disclosed.
If the above information is not sufficient to convince those who think ghosts (or aliens) should not be disclosed, then I would advise them to consult with an attorney
If you are a home seller in Val Vista Lakes, Gilbert, or anywhere in the Phoenix Metro area or any other city in Arizona, and you have a ghost in your home, or aliens from another planet, then be sure to disclose that "Material Fact". Otherwise it could come back to haunt you. (pun intended)
If your Realtor tells you that you don't have to disclose it, then cite the New York case for him/her.
Imagine you don't reveal their is a real or imagined ghost in a home on the advice of a very stupid Realtor.
The home was sold 4 years ago for $200,000.
Buyer wants out today,as the home has greatly dropped in value, lets say 60% and today the home is worth $80,000. Buyer hears from neighbors that there is reportedly a ghost in the home. The buyer claims suddenly that the ghost has made themselves to the buyers and the buyers are frightened. Buyer says he was not aware of the ghost till lately, and the mysterious happenings in the home must have been caused by the ghost. Some people will think what a neat way to get out of an under water home, and get all their money back.
Buyer sues for all the money he has paid for the home, to give him back his down payment and pay off the mortgage.
The buyer will sue the Property Seller, the Agent, and the Brokerage office. The buyer will win the suit, as a material fact was withheld from him/her/them.
This is one additional reason, to always disclose material facts when you sell a home as an owner, an agent, and the owner of the brokerage. Especially in times like we are going through.
Just because a certain thing is not covered in the list of mandatory things to be revealed, does not mean you are not required to reveal any material fact that can effect the value or potential market of a property.
I think the more 'real world' example is bad neighbors. When do you disclose those? There's not a line on the SPDS about it, right? Is there something like 'other material nuisances affecting the property'?
I think the more 'real world' example is bad neighbors. When do you disclose those? There's not a line on the SPDS about it, right? Is there something like 'other material nuisances affecting the property'?
Arizona Sellers Property Disclosure Statement form, instructions on the first page: Item (6) Other Conditions and Factors: “These blank lines provide space for you to disclose anyother important information concerning the property that might affect the buyer’s decision-making process, the value of the property, or its use, and to make any other necessary explanations.”
The actual lines in the SPDS are 231-237. That's were you disclose anything you know that does not have a specific field.
Lines 231-232 read:
"What other material (important) information are you aware of concerning the Property that might affect the buyer's decision-making process, the value of the Property, or its use? Explain:________________________________________"
Ghosts are a real world example, and it happens more than one may think. The case of (Stambovsky v. Ackley, 169 A.D.2d 254 (NY App. Div. 1991)) is one that made it into court. There are probably others that were settled outside of court.
And in the blog I read there were many Realtors who don't understand that it should be disclosed. They erroneously associate "ghosts" with "death on the property". In Arizona, a death on the property does not have to be disclosed. But a ghost is a different situation altogether.
Oh I'm sure disputes about ghosts are very real. I just think bad neighbors probably outnumber them 1000 to 1.
As a buyer I would NOT want to be informed of deaths on the property. I would assume most houses have someone die in bed now and then. I don't need details.
I think murder/suicides and other very violent crimes are probably under that "other material information" umbrella.
I have family who moved from here to Houston and did a lease with option on a house there. They learned several months after moving in that it was the scene of a gruesome, national-news child neglect case. I think they bought it anyway.
Oh, I think it can. It doesn't matter if the seller believes in ghosts or not; even if it turns out the buyer doesn't believe in them either, it should be disclosed.
Hmm, interesting but what if you don't believe in ghosts? Can a ghost even be a "material fact"??!!
Nurse, yes it remains a material fact. However, it won't necessarily affect everyone's decision and cause them to not buy. But non-disclosure of that fact can allow someone to get out of the contract if they desire, even though they don't believe in ghosts.
Notice the wording in the disclosure form below, where it says "might affect":
"What other material (important) information are you aware of concerning the Property that might affect the buyer's decision-making process, the value of the Property, or its use? Explain:________________________________________"
Here's what can happen if a seller has stated to neighbors that there is a ghost in the house, and does not disclose it.
A person who does not believe in ghosts buys the home.
After escrow closes, the buyer has buyers remorse and wishes he had not bought this home because he realizes he could have gotten a much better deal in another community in a closely adjoining city.
Before move in, he's visiting the home to determine furniture placement etc, when a neighbor comes over to meet their new neighbors
During the conversation the neighbor mentions the ghost that the seller said visits every night.
The buyer laughs it off because their family doesn't believe in ghosts. However, a light goes off, and he realizes that here is a way out of this contract.
He contacts his agent and asks about the ghost. The agent, who didn't think ghosts had to be disclosed said, sure I had heard about it, but didn't believe it, and it didn't have to be disclosed anyway, because in Arizona a death on the property does not have to be disclosed.
The buyer says: but wait a minute; Captain Bill said ghosts have to be disclosed. Besides,
do you know who the ghost is, and
do you know where it died.
It could have died anywhere, couldn't it?
And also, isn't a death on the property different from a ghost, or whatever it is, being active on the property and disturbing the occupants?
The agent, being a nice young man accustomed to short hand texting says:
WTF, I never thought of it that way. Perhaps I should have asked my broker to get a legal opinion.
NIPGF (Translated: Now I'll Probably Get Fired)
So the buyer contacts an attorney who was familiar with (Stambovsky v. Ackley, 169 A.D.2d 254 (NY App. Div. 1991)) and the attorney says: Welcome, Mr. Buyer, I'll get you out of this contract, and we'll both make some money.
So they sue...
the buyers agent,
the agents broker,
the listing agent, and
her broker, and
the seller
...for failure to disclose a material fact. And they will win because the precedent is already set.
Oh I'm sure disputes about ghosts are very real. I just think bad neighbors probably outnumber them 1000 to 1.
Freddy, you're probably right about the statistics. However, if I were going to disclose a bad neighbor, I would first get a written legal opinion from a real estate attorney. The reason is that what I consider a bad neighbor may be a personality conflict. If I disclose something about that neighbor in writing in the SPDS (where disclosures must be made in writing) then the neighbor could have grounds for a law suit against me for libel.
While I agree that bad neighbors "probably" need to be disclosed, I would advise having a "written legal opinion" so as to guard against a libel law suit.
Quote:
quote=ReadyFreddy
I think murder/suicides and other very violent crimes are probably under that "other material information" umbrella.
Here's the Arizona law on that subject. It's explained on page 1 of the SPDS:
" By law, sellers are not obligated to disclose that the property is or has been:
1) the site of a natural death,
suicide,
homicide,
or any other crime classified as a felony;
2) owned or occupied by a person exposed to HIV, or
diagnosed as having AIDS or any other disease not known to be transmitted through common occupancy of real estate; or
3) located in the vicinity of a sex offender..."
The reason so many Realtors are under the mistaken opinion that a "ghost" does not have to be disclosed, is they are attaching a "ghost" to the fact that a "death" on the property does not have to be disclosed.
A death on the property, and a "ghost" are two different issues.
Freddy, you're probably right about the statistics. However, if I were going to disclose a bad neighbor, I would first get a written legal opinion from a real estate attorney. The reason is that what I consider a bad neighbor may be a personality conflict. If I disclose something about that neighbor in writing in the SPDS (where disclosures must be made in writing) then the neighbor could have grounds for a law suit against me for libel.
While I agree that bad neighbors "probably" need to be disclosed, I would advise having a "written legal opinion" so as to guard against a libel law suit.
Here's the Arizona law on that subject. It's explained on page 1 of the SPDS:
" By law, sellers are not obligated to disclose that the property is or has been:
1) the site of a natural death,
suicide,
homicide,
or any other crime classified as a felony;
2) owned or occupied by a person exposed to HIV, or
diagnosed as having AIDS or any other disease not known to be transmitted through common occupancy of real estate; or
3) located in the vicinity of a sex offender..."
The reason so many Realtors are under the mistaken opinion that a "ghost" does not have to be disclosed, is they are attaching a "ghost" to the fact that a "death" on the property does not have to be disclosed.
A death on the property, and a "ghost" are two different issues.
Yes. A ghost, supposedly, can occur for various reasons. It is not always a result of someone dying on the property. Sometimes only one person in a family can be aware of them. Sometimes one family is bothered by them but the next family is not. Sometimes they can be attached to a family or a family member and follow them when they move and are not a part of the property at all. Ok, this is through my reading, not experience.
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Besides, 
