Stambovsky v. Ackley

Rule of Law

A condition created by a seller that decreases the value of a home, and is unlikely to be discovered by the buyer, must be disclosed by the seller.

Stambovsky - plaintiff - entered into a contract for the purchase of a home in Nyack, New York, with Ackley - defendant. Unbeknownst to Stambovsky, Ackley had held the house out to the public as a haunted house.

An article had been written about the home in Reader's Digest, and the home was included on a haunted homes tour of Nyack.

Issue

Does a seller have a duty to disclose to buyer the existence of a condition created by the seller that decreases the value of a home, and is unlikely to be discovered by the buyer?

A condition created by a seller that decreases the value of a home, and is unlikely to be discovered by the buyer, must be disclosed by the seller.

In this case, Ackley held the home out to the public as a haunted house, thus having the potential to decrease its value.

The trial court dismissed the complaint, stating that no remedy at law was available.

Stambovsky then appealed to the First Department.

Since this is a condition that a buyer should not be expected to consider prior to purchasing a home, Ackley had a duty to disclose this fact prior to entering into a contract for the home's sale.

Therefore, Stambovsky's complaint should be reinstated because he has a remedy at law for Ackley's breach.

Ackley did not disclose these facts to Stambovsky during their negotiations.

Upon learning that the home was haunted, Stambovsky brought this action to rescind the sales contract for the home.

Holding and Reasoning

Yes. Stambovsky's complaint must be reinstated because Ackley had a duty to disclose the fact that he had held the home out as a haunted home.