Ethical Consideration Assuming that Ackleys behavior was unethical, was it unethical because she failed to tell Stambovsky something about the house that he did not know, or was it unethical because of the nature of the information she omitted? What if Ackley had failed to mention that the roof leaked or that the well was dryconditions that a buyer would normally investigate? Explain your answer. Spotlight on Sales of Haunted Houses: Case 24.2 Stambovsky v. Ackley Supreme Court, Appellate Division, New York, 572 N.Y.S.2d 672, 169 A.D.2d 254 (1991). When will a buyer of a house that is allegedly haunted have the right to rescind the deal? iStockPhoto.com/pixeldigits FACTS Jeffrey Stambovsky signed a contract to buy Helen Ackleys house in Nyack, New York. After the contract was signed, Stambovsky discovered that the house was widely reputed to be haunted. The Ackley family claimed to have seen poltergeists on numerous occasions over the previous nine years. The Ackleys had been interviewed about the house in both a national publication (Readers Digest) and the local newspaper. The house was included on a walking tour of Nyack, New York, as a riverfront Victorian (with ghost). When Stambovsky learned of the houses reputation, he sued to rescind the contract, alleging that Ackley and her real estate agent had made material misrepresentations when they failed to disclose Ackleys belief that the house was haunted. ISSUE Was the failure to inform Stambovsky that the house was supposedly haunted a material misrepresentation that would allow him to rescind the contract? DECISION Yes. The court allowed Stambovsky to rescind the contract. REASON Ackley and her family had created the houses reputation as haunted and had profited from that reputation over a number of years. That reputation harmed the resale value of the home, however. Because the Ackleys had created the impairment and knew that it was not likely to be discovered by a purchaser from out of town, they had an obligation to disclose it. They should have brought the impairment to the attention of all prospective buyers, including Stambovsky. Even though the Ackleys did not actively mislead Stambovsky, they allowed him to sign the contract knowing that he was unaware of the homes haunted reputation. Because they unfairly took advantage of his ignorance, they could not enforce the contract.