How to Sell a Haunted House

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1:05I was sleeping in the bedroom. My wife was next to me. It was dark, and I heard creaking coming up the steps. But it's an old house, so I didn't really think anything of it. But then it sounded like the door was opening. But I was facing towards the window, so I didn't really turn over to see what was going on. and then suddenly felt like something sat on the bed right next to me and the bed actually felt like it pushed down and I felt like someone was leaning against me. Out of the corner of my eyes, through the window I could see a silhouette of a female figure but the person really wasn't there but it felt like it was there.

1:48Then the person, or the ghost I guess, got up and I could hear the door again creaking and the stairs creaking going down. And then I freaked out and woke up my wife. And basically I could hardly talk and say, I think I saw a ghost. And what did your wife say? Well, she asked me, well, was it male or female? I said, female. And she says, oh, yeah, she's been around before. So your wife didn't just say you're having bad dreams. She said, oh, yeah, I know her. I've seen her. She's one of the regular. Yes, she's one of the regulars, yes. This is Mark Cavanaugh. His wife, Cynthia Cavanaugh, grew up in a house at One Lovetta Place in Nyack, New York.

2:36Her mother and father, Helen and George Ackley, bought the house in the late 60s. Here's Cynthia. Well, when we moved in, it had been vacant for seven years. Absolutely nobody was supposed to live in there. my mom was outside doing something and two of the neighborhood kids came shortcut from school across the property and she waved at them and said hi you live around here and they go oh yeah over there and she goes oh that's nice I need to introduce myself to your folks and the older of the girls said you know lady you bought a haunted house don't you and she said No, I didn't. No, I bought a haunted house.

3:21Her younger brother said, oh, yes, we see them in the windows all the time. The ghosts. The ghosts. The house was right on the Hudson River, a huge old Victorian, three stories, almost 5 ,000 square feet. It was in bad shape and needed a lot of repairs. But Cynthia's mother said that as soon as she stepped into the front hall, she knew she was home. My mother, at one point in time when she was doing some painting work in the downstairs living room area, she was in the house by herself. My brothers and my sister and I were at school. My dad was at work and she was up on a stepladder painting the second room this particular color.

4:11And you sometimes got the feeling that somebody was watching you. Well, she did, and she turned around real quick, and there was nothing there. So she went back to painting, and when the feeling came over her again, she made a concerted effort to turn very slowly and make sure she didn't blink and kept her eyes open. And as she turned, she saw this gentleman sitting about six or eight inches off the floor with his legs crossed. And she described his clothes quite, he was in quite unique clothing, more along the lines of colonial times. And she just made a point, like I said, not to blink, not to close her eyes.

5:00And she looked at him and said, I hope you like the color. and he nodded once and then disappeared. Cynthia's mother, Helen, wrote that he was solid-looking, with apple cheeks. She wrote, No, I wasn't drinking that day. No, the paint fumes hadn't got to me. No, I don't know why I saw him then and have never seen him since. But I do know that he seemed happy to be there. Cynthia remembers that her mother wasn't afraid and didn't want her four kids to be either. She wrote, I never got anything but good vibes. We started the school year about a month into regular classes, all four of us. My brother was in junior high, I was in high school.

5:48I was a freshman in high school. And then my younger brother and sister were in elementary school. and about the third week the bed would start shaking about 10 or 15 minutes before I needed to get up like you know maybe you should eat breakfast before you go but then come December when Christmas break rolled around my mom goes well why are you up so early and I said because my bed won't stop shaking and there's no reason to stay in bed if it keeps shaking every two or three minutes. And she goes, what do you mean your bed's shaking? I go, my bed keeps shaking. So she goes, oh, okay. This is what your dad had laid out for us to do today.

6:32Let's get working. And we didn't talk anything about the rest of the day about it until it was time for us to go to bed that night. And my mom said, Cindy, when you go to bed tonight, tell the ghosts. It's a school holiday. You don't have to get up so early. Let's see what happens in the morning. And my brother, who was standing there with me, said, oh, I'll try it too. And we both kind of looked at each other like, you got the same thing going on? And sure enough, I went to bed that night, got ready, got in bed just before I turned on the light going, just so you know, I don't have to go to school in the morning.

7:12It's Christmas holiday. And I got to sleep in about an hour, an hour and a half. Tell me about some of the other things that you and your family experienced. Well, I was staying up late, like most high schoolers do, and everybody else had gone to bed. And as I'm getting ready to go into my bedroom, I look into my room, and there's a woman in a white dress sitting on the bed looking towards where my mirror for my dresser was and she was brushing her hair. She had long blonde hair, kind of wavy, very slender looking and you know she looked very solid at the time and when she turned to look at me she had a very pleasant face and didn't seem at all upset that I had caught her sitting there on my bed brushing her hair.

8:12And she looked at me and I said, excuse me, and went back into the TV room for another 10 or 15 minutes before I could go back in to go to bed. Did you think that she could see you? Was it clear that she was spun? Yes, because when I stood there in the doorway and said, excuse me, she kind of nodded her head a little bit, then turned back to the mirror and I left. So was the sense kind of that you were saying, excuse me, you're in my room, and she was saying, well, actually, this is my room. I'll be done when I'm done. Basically, yes.

8:49Would you all talk about this at breakfast in the morning? Was the whole family in on this, that things were happening, and would you all sit around and tell, oh, well, I saw that lady last night, or I saw that guy? Would you talk about it? Sometimes, sometimes we did. And my dad was always very interested when people would come over to visit out-of-towners and family that would stay for two or three days. He'd, at breakfast time, he'd go, well, did anything interesting happen last night? And sometimes there were stories. Some of them were like, oh yeah, I was going to go to bed. And I heard talking down in the TV room.

9:32So I went down to see if the kids were still up, and there was nobody there. Or one of my other cousins, grown cousins, she was saying that one night she went to bed, and she said, I closed my eyes, pulled the covers up, said, good night. And the next thing I know, somebody's sitting on my feet. So I just kept my eyes closed and said, goodnight. Cynthia's mother started collecting the stories they told at the breakfast table. Cynthia said her mother would write down little notes. When her mother heard that Reader's Digest was looking for unusual human interest stories, Helen Ackley decided to submit.

10:21Her essay was published in May of 1977 with the headline, Our Haunted House on the Hudson. Helen Ackley wrote, There are always little incidents to mull over in a house like ours. She wrote about footsteps, doors opening for no reason, and the sudden disappearance of a ham sandwich. She wrote, We've come to savor these happenings. Now we wonder if the time comes for us to move again. Is there any way we can take our other worldly friends with us? More than a decade later, Helen Ackley did decide to move and to sell one Lovetta place It didn't go as planned The House became the center of a case that's still widely taught in law schools today It's referred to as the Ghostbusters ruling The judicial opinion read, as a matter of law, the House is haunted I'm Phoebe Judge.

11:22This is Criminal.

11:32We'll be right back.

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13:53By the late 80s, Cynthia and her siblings had grown up and were starting their own lives. Cynthia's father had died, and her mother Helen was worried about keeping up such a big house by herself. The property taxes were getting too high, and she was ready to move somewhere warm. So she put One Lovetta Place on the market. My name is Richard Ellis. I'm the broker-owner of Ellis Sotheby's International Realty. I've been a real estate broker for 35 years, and I was the listing agent for One Lovetta Place in Nyack. And what did you know about the house? So we knew that the owner, Mrs. Ackley, was a lovely woman, very eccentric, a real kind of colorful character.

14:42And she would talk to us about her ghosts all the time. So it was no shock when this all came up. Do you often have clients talking to you about ghosts in their homes? No, but periodically I have clients who are buyers who might ask if there's a ghost. And I would say after all these years of experience, maybe that's three to five percent of the buying public might ask about that. Cynthia says a young couple from New York City started looking at the house. Patrice and Jeff Stambovsky were expecting their first child and wanted to move to the suburbs to start their family. They viewed it more than two or three times, I believe.

15:35It kept coming back and coming back. So I was very, very pleased when she said, yeah, we've got a deal going. And you thought it was all set and everything was going to work out? Yes. Yes. This was considered luxury real estate, even though it was selling for, I think, under$800 ,000. And we were so thrilled when the buyer came along. We were like, you know, let's get the contract. Did you tell them about the ghosts that the owner spoke of? So there was another agent in my real estate office that was working with the Stamboskis, and she did not disclose anything. We all laughed about the ghosts in the office, that Mrs.

16:22Ackley thought she had a ghost. So no, it was not disclosed to them. The Stambovskys made an offer,$650 ,000. They put down$32 ,500. It was 1989. This is Lior Strahilovitz, law professor at the University of Chicago. A few days after, the Stambopskis are calling around to different contractors to try to get work done on the house once they close. And one of the people they talk to says, wait, which house did you buy again? And they provide the address and the contractor says, oh, you bought the haunted house. Well, this was the first that the Stambobskis had heard about the house being haunted or having a reputation in the community as being haunted.

17:14And they decided that they didn't want to go forward with the deal because had they known about this, they wouldn't have bought the house. So they tried to pull out of it? Yes. So they requested that the Ackley, the sellers, refund their money. And the Ackleys refused to do so. So the Stambovskis felt like they had no choice but to go to court. Jeff Stambovsky sued Helen Ackley, arguing that all of Helen Ackley's ghost stories, which he said he had not known about before signing the contract, threatened the house's property value. The court dismissed the complaint, noting that Helen Ackley did not have a duty to tell the Stembovskys about any ghosts.

18:08New York had long applied the rule of caveat emptor. Caveat emptor is the Latin phrase that means let the buyer beware. and usually that means if you're trying to buy something and there were questions that you didn't ask that maybe you should have asked well that's on you the buyer not on the seller the seller's under no obligation to disclose anything about about the real estate the seller can't actively conceal problems with the real estate, but so long as the seller isn't making affirmative misstatements, then if there's any problems that are subsequently discovered with the property, that's on the buyer, that's not on the seller.

18:58Jeff Stambofsky appealed the decision. The New York Supreme Court, the appellate court, decides that notwithstanding that rule of caveat emptor, the Stambofsky should be let out of the contract, should be able to rescind. The appellate court found that it was only fair for the doctrine of caveat emptor to be set aside in this case. In most buyer-beware cases, the defect is physical, like a leaking roof, and a diligent buyer could be expected to discover it during inspection. But this case was different. You can't inspect a house for ghosts. And it was 1989, so you couldn't Google the house and find Helen Ackley's article in Reader's Digest or see that the home was included in a ghost tour of Nyack.

19:51As one judge wrote, a very practical problem arises with respect to the discovery of a paranormal phenomenon. He went on to write, quote, Who You Gonna Call, as a title song to the movie Ghostbusters Asks. You know, it's fairly common for there to be a leaky roof maybe that the seller knew about and that the buyer's inspection didn't recover. It's fairly common for there to be termites infesting a property that the buyer only discovers after moving in. And then you get into a big dispute of did the sellers know about this before they sold or were the sellers unaware? That's kind of your garden variety real estate litigation.

20:37The ghost case, there's only one ghost case. The judge wrote that by talking and writing about the ghosts in her home, Helen Ackley, quote, fostered the home's reputation in the community. He described Helen Ackley's, quote, promotional efforts. You know, the court says, as a matter of law, the house is haunted. Well, that's silly. As a matter of law, there's no such thing as ghosts. But what the court means when it says, as a matter of law, the house is haunted is, hey, you know, Ackley, you're the ones who created this problem with your house. And you told the whole world about it. Everyone except for the Sambovskys, for whom that would have been highly relevant information.

21:22So when the court says, you know, as a matter of law, the house is haunted, they don't really mean that literally. But they do mean, you know, that you owe a duty to a buyer that is at least as strong as the duty you've taken upon yourself to, you know, inform and entertain the general public. The judge also made one additional point. If Helen Ackley believed there were ghosts in the house, then she was trying to sell a house that was occupied.

22:08We'll be right back.

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24:30Jeff Stambofsky and Helen Ackley settled out of court. The Stambofsky's got half of their money back and were let out of the contract. We reached out to them and spoke with Patrice Stambofsky. She said that at the time she was worried about what it would be like for her child to grow up in a house that everyone thought was haunted. She said, I didn't want to be in the house where there were other kids that said, oh, you live in the haunted house. Law professor Leo Strahilovitz has taught this case for years and was once able to speak with Jeff Stambofsky. Jeff Stambofsky says he does not believe in ghosts, but he then went on to say, I have a master's in business administration from the University of Chicago.

25:18And so while I don't believe in ghosts, I do believe that other people believe in ghosts. So he was thinking about, well, I'm buying this really expensive asset. And if it turns out that the asset I'm getting is worth less than what I thought I was buying because of the superstitions of others, then that's not an asset I really want. Something is worth whatever someone else is willing to pay for it. and so he doesn't believe in ghosts, but he does believe in markets. And where fear of ghosts or superstitions are influencing what people are willing to pay for things in markets, then he kind of does believe in ghosts in a roundabout sort of way.

26:04The standard real estate adage is location, location, location. But in my profession, the better motto is perception, perception, perception. Even though the property physically is fine, people are feeling souls. We have perceptions. And if the perception is negative, whether it be paranormal activity or crime scene stigma or what have you, that very much translates into the market's response to that property. So it's kind of mind, body and soul. And yes, there are physical elements of real estate, but there are also emotional elements. and they very much have an effect on the value. Randall Bell is a specialist in real estate damage economics.

26:50He consulted on the property where 39 members of the Heaven's Gate cult died by suicide in 1997. He also consulted on Nicole Brown Simpson's condo and one of the sites of the Manson family murders. Part of his work is evaluating how the psychological stigma attached to these properties affects their value. The Stamboski case is famous because it really laid the groundwork that this issue of stigma or risk is legitimate, at least in the worldview of the courts. And this case is still cited in law school textbooks. Stamboski and Reed v. King, which is a similar case in California, are cited almost daily in this type of work.

27:38They're very foundational in terms of legitimizing or validating that this is a very real issue. Tell me about Reed v. King. Reed v. King was a case in Northern California where very sadly an ex-husband came along and murdered his ex-wife and children in a small house in a rural area near Reno, Nevada. and the seller sold the house and failed to disclose that matter to the new buyer. The buyer found out, and in fact, the seller had asked the neighbors to keep it quiet. The neighbors didn't feel that that was right. And when the buyer found out, they were, understandably, they were very upset, and they filed a lawsuit successfully.