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The BUSKLAW March Newsletter: You Just Purchased a Haunted House! Can You Sue and Get Some Relief?


This is the Los Angeles mansion used in the first season of the television series American Horror Story. The new owners are not amused.
(CREDIT: ALISSA WALKER/CREATIVE COMMONS)

Are you troubled by strange noises in the middle of the night?
Do you experience feelings of dread in your basement or attic?
Have you or a member of your family ever seen a 
spook, specter, or ghost?
 ----Ghostbusters. Dir. Ivan Reitman. Perf. Bill Murray, Dan Aykroyd, Harold Ramis, Sigourney Weaver. Columbia Pictures, 1984. Film.

The new owners of the Rosenheim Mansion in Los Angeles, CA, are suing the sellers and their real estate agent for $3 million for failure to disclose several problems with the house, including the fact that it's haunted by two ghosts. In addition, the house was the focus of American Horror Story - Murder House, a Fox television series of the horror genre (its quality varies), and fans of the show stop by for photos and have allegedly tried to break-in (undoubtedly looking for the ghosts). On a more earthly plane, the new owners also allege the defendants' failure to disclose leaks, water damage, and mold.

For our discussion, let's assume that the Mansion is located here in Michigan. (After all, there are accounts of Grand Rapids Heritage Hill homes being haunted!) So how might a Michigan court evaluate the merits of this lawsuit?

We'll start with the requirement that the Michigan Seller Disclosure Act requires sellers of a Michigan home to disclose a great deal about the condition of the property to a buyer or their real estate agent. The required disclosure includes known "settling, flooding, drainage, structural, or grading problems." But the disclosure statement contains first, a disclaimer that the sellers haven't "conducted any inspection of generally inaccessible areas such as the foundation or the roof," and second, the warning that the "BUYER SHOULD OBTAIN PROFESSIONAL ADVICE AND INSPECTIONS OF THE PROPERTY TO MORE FULLY DETERMINE THE CONDITION OF THE PROPERTY. THESE INSPECTIONS SHOULD TAKE INDOOR AIR AND WATER QUALITY INTO ACCOUNT, AS WELL AS ANY EVIDENCE OF UNUSUALLY HIGH LEVELS OF POTENTIAL ALLERGENS INCLUDING, BUT NOT LIMITED TO, HOUSEHOLD MOLD, MILDEW AND BACTERIA." (Two flaws: the phrase "but not limited to" is superfluous, and there should be a comma after "MILDEW.")

The disclosure form doesn't address whether the seller has seen ghosts in the house (anybody here seen a ghost?) or whether the house has been featured in a horror movie or macabre television series. Or if so, whether that use has caused a fan frenzy (or a ghostly infestation) that disturbs the homeowners' possession of the property.

The honest and accurate completion of the Michigan disclosure form would hurt a buyer's lawsuit for hidden water damage and mold. A Michigan buyer should have paid to test the indoor air quality and had the seller remediate any problems before the sale. 

About an infestation of rowdy spirits, any judge or jury would be rightfully skeptical. Plaintiffs would likely have to prove by a preponderance of the evidence that first, ghosts exist; second, that they physically manifested in the home; and third, that the manifestation caused tangible damage or bodily harm for which the seller/defendants are liable. Good luck with that, even though we live in a reality that we actively generate.

Buyer's best chance of recovery is on the allegation that the featuring of the house in a horror show created a fan frenzy amounting to a nuisance. But apparently the seller/defendants in the California case signed a statement that there were no neighborhood nuisances to disclose. (The Michigan disclosure form doesn't mention a nuisance or what condition of the property qualifies as one.)

The private nuisance tort connected with real estate has been around for a long time. (For you non-lawyers a tort is simply a civil wrong.Examples include your neighbor keeping dogs that bark so much that you can't sleep, or if your neighbor decides to stay up at night pounding a home improvement into existence; these activities would interfere with the use and enjoyment of your property. So if the sellers in our case knew about - but failed to disclose - multiple incidents of fans trespassing on the property to take selfies or trying to break into the home, plaintiff buyers might well prevail on that legal theory. 

Concerning damages (disregarding water damage and mold that sellers should have disclosed or buyers tested for), $3 million may be wishful thinking. Fan frenzy usually dies out over time. And there are cases where haunted-house owners have sold their properties above market price to buyers hoping to experience the paranormal! 

So who you gonna call if your house is haunted? The Ghostbusters, a trial lawyer, or a reality-TV network? I suggest the latter.  
____________________________________
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