Dear Alex:
We are planning to sell a property in which the current tenant believes that the house is haunted by a ghost. We don’t believe in ghosts. Do we actually have to disclose the alleged ghost to prospective buyers?
In California, sellers have a duty to disclose known facts that materially affect the value or desirability of a property, if the facts are not known or readily accessible to the buyer. In some cases, psychological factors can be just as materially detrimental to property values as physical defects.
There is even a case from New York in which a property buyer was permitted to rescind a home purchase contract because the sellers did not disclose that the property had a reputation for being haunted. In that case, the house had been widely publicized as haunted, had been featured in Reader’s Digest as haunted, was among several houses on a haunted house walking tour and had a local reputation for being a haunted house.
Luckily, the issue does not require a factual determination as to whether the property is actually haunted. The real issue is whether the property has a reputation for hauntings to the point that it has become stigmatized and its value or desirability is reduced.
The New York case described above, permitted the buyer to rescind the purchase agreement because of the house’s reputation for being haunted and the stigmatizing effect that such reputation had on the home, not because of the alleged haunting itself.
The rules governing disclosure of some of the more common property-stigmatizing issues, such as recent deaths within a property, are regulated by statute in California under Civil Code §1710.2. Unfortunately, a reputation for hauntings is not a condition defined by the statute.
Whether or not you believe in ghosts, if the house is has a reputation for being haunted to the point that it could be stigmatized and suffer a decrease in value or desirability, the reputation should be disclosed. On the other hand, if it is only the current tenants who believe the house to be haunted, it is probably not a stigmatizing factor.
Whether the alleged haunting is a stigmatizing factor that would require disclosure is a determination that can ultimately only be concluded by a judge or jury. This is a fine line to tread; if only one person believes the property to be haunted, the broad disclosure of that one individual’s belief could create a stigma against the property.
However, if the rationale for not wanting to disclose the alleged haunting is because prospective buyers would be driven away from the property, the condition probably has a sufficiently negative effect upon the desirability of the property and disclosures should be made. Remember that under no circumstances is an owner or owner’s agent permitted to make an intentional misrepresentation in response to a direct question posed by a potential buyer.
Dear Alex:
We are planning to sell a property in which the current tenant believes that the house is haunted by a ghost. We don’t believe in ghosts. Do we actually have to disclose the alleged ghost to prospective buyers?
In California, sellers have a duty to disclose known facts that materially affect the value or desirability of a property, if the facts are not known or readily accessible to the buyer. In some cases, psychological factors can be just as materially detrimental to property values as physical defects.
There is even a case from New York in which a property buyer was permitted to rescind a home purchase contract because the sellers did not disclose that the property had a reputation for being haunted. In that case, the house had been widely publicized as haunted, had been featured in Reader’s Digest as haunted, was among several houses on a haunted house walking tour and had a local reputation for being a haunted house.
Luckily, the issue does not require a factual determination as to whether the property is actually haunted. The real issue is whether the property has a reputation for hauntings to the point that it has become stigmatized and its value or desirability is reduced.
The New York case described above, permitted the buyer to rescind the purchase agreement because of the house’s reputation for being haunted and the stigmatizing effect that such reputation had on the home, not because of the alleged haunting itself.
The rules governing disclosure of some of the more common property-stigmatizing issues, such as recent deaths within a property, are regulated by statute in California under Civil Code §1710.2. Unfortunately, a reputation for hauntings is not a condition defined by the statute.
Whether or not you believe in ghosts, if the house is has a reputation for being haunted to the point that it could be stigmatized and suffer a decrease in value or desirability, the reputation should be disclosed. On the other hand, if it is only the current tenants who believe the house to be haunted, it is probably not a stigmatizing factor.
Whether the alleged haunting is a stigmatizing factor that would require disclosure is a determination that can ultimately only be concluded by a judge or jury. This is a fine line to tread; if only one person believes the property to be haunted, the broad disclosure of that one individual’s belief could create a stigma against the property.
However, if the rationale for not wanting to disclose the alleged haunting is because prospective buyers would be driven away from the property, the condition probably has a sufficiently negative effect upon the desirability of the property and disclosures should be made. Remember that under no circumstances is an owner or owner’s agent permitted to make an intentional misrepresentation in response to a direct question posed by a potential buyer.
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