Stambovsky v. Ackley - Presentation PDF

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introduction: Greetings everyone! Thank you all for coming! My name is István Szijártó. I’m a hungarian student of Pécs University and I’m doing my first year at the Faculy of Law. I’ve chosen to talk about a very interesting case of real property: the case of Stambovsky v. Ackley, commonly known as the Ghostbusters ruling, which is a case in the New York Supreme Court, Apallete Division. You may very well ask: why would this interest me? I am going to show, how supernatural phenomenas act together with the law of real property in a court decision. overview: First of all I am going to explain some general terms you stumble upon in real property law. Then I am going to talk about the case’s origins: the house being haunted, the seller and the buyer. Furthermore I will analyze the court’s decision. Last but not least I am going to give you a summery of the case and will talk a little about it’s ongoing reputation. general terms: Let me start with the explanation of those general terms you can see on the slide. 

closing: Closing is the final step in executing a real estate transaction. On the closing date, the ownership of the property is transferred to the buyer.

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caveat emptor: Caveat emptor is Latin for "Let the buyer beware". Generally, caveat emptor is the contract law principle that controls the sale of real property after the date of closing. The phrase caveat emptor arises from the fact that buyers typically have less information about the good or service they are purchasing, while the seller has more information. The quality of this situation is known as 'information asymmetry'. Defects in the good or service may be hidden from the buyer, and only known to the seller.

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rescission: the cancellation of a contract by mutual agreement of the parties.

the case’s origins: Let’s go on to the second main point of the presentation. There is a house located in Nyack, New York. This house was reported many times by its owner, Helen Ackley to have

been haunted by poltergeists. This phenomena has even made it to local and national newspapers. When Helen eventually sold the house to Jeffrey Stambovsky, the buyer had no clue about the house being haunted, because he was from New York, thus he was not aware of the folklore of Nyack which held that the house is haunted. When Stambovsky learned of the haunting story, he filed an action requesting rescission of the contract of sale and for damages for fraudulent misrepresentation by Ackley. Stambovsky did not attend the closing which caused him to forfeit the downpayment. The New York Supreme Court (trial court) dismissed the action, and Stambovsky appealed. majority opinion: Let’s take a look at the majority opinion, which greatly affected the court’s decision in this case. The court noted that regardless of whether the house was truly haunted or not, the fact that the house had been widely reported as being haunted greatly affected its value. In other words: it was said to be legally haunted. Notwithstanding these conclusions, the court affirmed the dismissal of the fraudulent misrepresentation action and stated that the realtor was under no duty to disclose the haunting to potential buyers. Thus, no damages were available to Stambovsky because New York, at the time, adhered to property law doctrine of caveat emptor. In other words: the reason why the court made a decision like this lies in the doctrine of caveat emptor, which holds that the seller must not cover any faults of the real property to be sold. On the contrary the appellate court reversed the trial court's decision regarding the rescission action. Although it found that the seller has no duty – according to the caveat emptor - to disclose information about the property to be sold, in a merged law and equity system this doctrine can be modified to do justice to the parties. So the court affirmed the application for the remedy of rescission, within the bounds of the narrow exception to the doctrine of caveat emptor on the basis of a most unnatural bargain. Why is this? In this case, "the most meticulous inspection and the search would not reveal the presence of poltergeists at the premises or unearth the property's ghoulish reputation in the community," thus equity would allow Stambovsky the remedy of contract rescission against the seller, Ackley. summery of the case:

As I showed you the court’s decision, let me give you a short summery of what we heard about this case. 

The buyer, Mr. Jeffrey was awarded remedy of contract rescission.

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The decision was based partially on the donctrine of caveat emptor and partially on equity.

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The house being haunted “legally” – as it was stated – had played an immense role in the apallete court’s decision.

One may say, this case is quite unusual. Thus it has been adopted to the study material of U. S. law schools and has been frequently printed in many textbooks. I hope that all of you enjoyed this presentation of the Ghostbusters ruling. Thank you for your attention! You are welcome to ask any questions that may have arised during the presentation....