Congratulations to all of Spruce’s homebuyers this year! We hope you’re gearing up for a wonderfully fun and spooky first Halloween in your new home. In the event you’ve been experiencing uninvited visitors from the spectral plane well before All Hallows' Eve, you may be trying to obtain assistance from anyone who can help, like a reputable ghostbuster or maybe even your title company.
When you purchased your home, you had the opportunity to buy an owner’s policy of title insurance. Generally, an owner’s policy insures against matters that appear in the County recorder’s office, i.e. the public records, like a prior mortgage or judgment, or an easement or restrictive covenant that is not disclosed on Schedule B of your title policy.
The policy also contains a covered risk for loss or damage incurred by reason of “unmarketable title". But, could this actually apply to possible ghostly activity or supernatural phenomenon?
Believe it or not, a few Courts have investigated this issue for us! One of the most famous examples happened in our home state of New York, with a legendary ruling of “As a Matter of Law, This House is Haunted.” In this case, the Appellate Division of the Supreme Court ruled that a homebuyer could try to get out of a $650,000 purchase, due to the sellers not disclosing that the home was haunted with poltergeists. The Court allowed the buyer to pursue cancellation of the contract, because a “haunting” could possibly impact the home’s value.
However, the same Court later decided that even the most meticulous review of the public records would not reveal the presence of a poltergeist. Meaning, the haunted condition of the house did not constitute a defect in title.
More recently, the Superior Court of New Jersey, Union County, dismissed a lawsuit filed against a title insurance underwriter for unmarketability of title due to an anonymous “Watcher” of the house.
In this case, a New Jersey couple started receiving anonymous letters from someone who called themselves “The Watcher” three days after moving into their $1.35 million dream home. A string of eerie messages arrived at the home, saying things like “My grandfather watched the house in the 1920s and my father watched in the 1960s. It is now my time.” and "Have they found what is in the walls yet? In time they will. I am pleased to know your names and the names now of the young blood you have brought to me."
The buyers were freaked out and eventually filed suit alleging that the previous owners received a similar letter just days before the closing, failed to disclose it, and that “The Watcher” had a negative effect on the property value. After years in civil court, the case was dismissed. But, the story lives on in urban legend history, and Netflix recently won a heated auction for film rights to this dream house nightmare tale.
In both cases, there is a distinct confusion between title marketability and saleability. As explained by the American Law Reports, and further backed up by Courts in numerous jurisdictions, “unmarketable title” as used in a title insurance policy is different from our standard definition of marketability i.e. saleability.
In the title insurance context, a lack of economic marketability is not the same as title marketability, which is concerned with problems that affect legal rights of ownership. For example, an individual can hold “perfect title” or undisputed ownership on land that is worth zero dollars. In other words, a person can have marketable title to land that is unmarketable or worthless.
Consequently, defects that do not appear in the public records, like a ghoul or ghostly apparitions, relate solely to the economic marketability of a house, and therefore do not fall within the insuring provisions of a title insurance policy.
Massachusetts, Minnesota, Colorado, and Indiana have even further clarified by statute that disclosure of known hauntings is not required by the seller or real estate broker. Therefore, these parties are most likely not required to assist in your ghostbusting activities.
Unfortunately, the owner’s title insurance policy doesn’t insure against loss or damage incurred due to ghosts. Do you know of any reputable paranormal underwriters? Let us know in the comments! Until then, we’re afraid we just don’t offer any insurance products to protect you from ghouls, ghosts, or specters.
* Nothing in this post is to be considered as the rendering of legal advice for specific matters or cases, or creating an attorney-client relationship, and readers are responsible for obtaining such advice from their own legal counsel. This article is intended for educational and informational purposes only, and no warranty or representation is made as to the accuracy or completeness of the information contained herein.
1. Stambovsky v. Ackley (1991), 2. Stambovsky v. Ackley, 169 A.D.2d 254, 256 (1991), 3. Broaddus v. Woods, No. UNN-L-1933-15 (N.J. Super. Oct. 18, 2017), 4. Mass. Gen. Laws Ann. ch. 93, § 114(c), 5. Minn. Stat. Ann. § 82.68(3)(b)(2) and Minn. Stat. Ann. § 513.56(1)(2), 6. Colo. Rev. Stat. Ann. § 38-35.5-101, 7. Ind. Code Ann. § 32-21-6-5
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