Google it or Lose it?

Advancements in technology and changing societal norms and practices are factors that heavily impact the evolution of the law.  Certainly, no technological/societal advancement has had a greater impact on the law than the development of the internet and its ability to bring information into the living rooms of the general public. I have speculated with my class about how the internet may serve to bring a halt to one developing area of law.

At Common law, "Caveat Emptor" (Buyer Beware) ruled the area of real estate sales. Sellers had no obligation to disclose latent defects to a prospective buyer.  Certainly, a Seller was not allowed to make a false statement about the condition of the property or to lie in response to a  direct question, but the thorny area was how to deal with the failure to offer negative information about the property.  Under the doctrine of caveat emptor the seller's silence (failure to disclose defects) could not be the basis for a misrepresentation claim.  And, in some cases, even where the Seller has made statements about conditions ("Nope - no termite damage in this house") courts have been unwilling to assist a Buyer who relies on the representation without engaging in his/her own inspection.  However, the "modern trend" in the law has been to see more and more obligation placed on the Seller to come forward with known information that might impact on the demand for the property. We have all seen cases in texts such as:

Reed v. King: Seller failed to disclose that the house had been the scene of a murder a decade prior.

Stambovsky v. Ackley: Seller failed to disclose that the house had a reputation for being haunted - a reputation that the seller helped to create.

Hess v. Chase Manhattan Bank: Seller, a bank that had taken the property by foreclosure, failed to disclose a known, ongoing EPA investigation of the property for groundwater contamination.

But in each if these cases, the sales took place prior to the heightened prevalence of the internet (Approx 1981, 1989, and 1999 respectively).  If the seller's silence was material, then the buyer must also be able to prove reasonable reliance.  In the pre-Google search days, the murder, the haunted reputation or the investigation would not be readily discoverable by an out of town buyer. But today, a simple internet search on the property address would likely have turned up this information. Is a court now justifies in turning the responsibility back upon the Buyer to make reasonable internet inquiry on the object of a real estate purchase?  Courts place the burden on buyers to do reasonable home and pest inspections or suffer the consequences of not having done so. Will courts see information searches, no longer onerous, as the new norm in protecting against failure to disclose?

Oddly, with all the "before you buy a home..." advice sites on the internet, I couldn't find a single one that suggested doing an internet search on the address before buying.  Yet, when I recently looked at a condo for a potential purchase, the first thing I did after viewing the property was a google search.

Selling a haunted house:

Pest infestation:



Google searches:

Featured Case: Stambovsky v. Ackley - A Ghostly Silence Undermines Contract

Helen Ackley's beautiful victorian house in Nyack, NY was for sale. From the opinion of the Appelate Division of  NY Supreme Courts:

Plaintiff, to his horror, discovered that the house he had recently contracted to purchase was widely reputed to be possessed by poltergeists, reportedly seen by defendant seller and members of her family on numerous occasions over the last nine years. Plaintiff promptly commenced this action seeking rescission of the contract of sale.

Stambovsky, a resident of NY City, was not familiar with the local folklore surrounding the house at 1 LaVeta Place when he paid a $32,500 deposit on a $650,000 purchase contract. But, Ackley had made no secret of the paranormal activity in her house, writing an article for Reader's Digest entitled, "My Haunted House on the Hudson" and listing her residence on local haunted house tours.

Normally, a seller has no obligation to disclose "defects" in the house. Caveat Emptor has been the legal rule of the day.  But, as Judge Rubin points out in his decision:

From the perspective of a person in the position of plaintiff herein, a very practical problem arises with respect to the discovery of a paranormal phenomenon: "Who you gonna' call?" as a title song to the movie "Ghostbusters" asks. Applying the strict rule of caveat emptor to a contract involving a house possessed by poltergeists conjures up visions of a psychic or medium routinely accompanying the structural engineer and Terminix man on an inspection of every home subject to a contract of sale.

This very practical decision rests also on other solid grounds:

In the case at bar, defendant seller deliberately fostered the public belief that her home was possessed. Having undertaken to inform the public- at large, to whom she has no legal relationship, about the supernatural occurrences on her property, she may be said to owe no less a duty to her contract vendee.

Stambovsky was allowed to rescind the contract.  I imagine that Ackley's subsequent advertisements  read: "Haunted House For Sale!"

See UPDATE on this case here.

The Stambovsky House: photo credit: http://www.berfrois.com/2011/04/the-law-is-a-white-dog/ 

Photo credit: http://nyackphotos.blogspot.com/2010/03/haunted-house.html
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Photo credit: http://ktransit.com/Kavanagh/Ghost/ghost.htm