THE SQUARE FOOTAGE IS 4,300, NOT 5,500 AS REPRESENTED! CAN I SUE?
Sellers and their brokers can be expected
to extol the virtues of the home or business for sale. At what point does mere opinion, which turns
out to be erroneous, become actionable misrepresentation?
In a recent California Court of Appeal
decision, the Court reports that an individual purchased a residence and
claimed that the seller and his real estate agent misrepresented its size. The agent advised the purchaser that the
residence contained approximately 5,500 square feet. As it turned out, the size of the residence
was about 4,300 square feet.
The seller and the real estate agent listed
the property in the Multiple Listing Service.
The description included "APX 5500", which means approximately
5,500 square feet. At the bottom of the
listing, the following statement was made:
"Information Deemed Reliable But Not
Guaranteed."
A flyer was printed and distributed
regarding the residence which also stated at the bottom as follows: "Above Information From
Sources Deemed Reliable But Not Guaranteed."
The real estate agent indicated that she
obtained the information regarding square footage from the seller's daughter
who told her that "the architectural plans used to construct the property
stated the house was 5,500 square feet."
The decision also reports that the daughter and her husband were the
owners at the time the house was constructed and that the agent obtained the
information from her because her father, the current owner, did not speak
fluent English.
The agent advised that she
"relied on this
information . . . in submitting it to the Multiple Listing Service [and]
declared that in her several visits to and visual inspections of the property
she saw no indication that the house was not 5,500 square feet. She declared that at no time prior to close
of escrow did she hear or have reason to believe that the house was not 5,500
square feet."
The complaining purchaser, self-employed as
a stock trader, and holding a bachelor's degree in business administration from
the University of Southern California, was endeavoring to "diversify by investing in
residential real estate. He was looking
for bargains or distress sales. He
previously bid on two properties in Beverly Hills which were in foreclosure, but his bids were rejected
as too low. His theory of investing in
real estate was to find bargains on a per square foot basis. His prior two bids on the Beverly Hills properties were based on square footage, after he
obtained comparable sales information from a broker."
As the litigation proceeded, the real
estate agent could not produce a declaration by the seller's daughter
confirming her comment and the architectural plans submitted in evidence showed
only 5,334 square feet rather than the 5,500 square feet claimed to exist.
The seller and his real estate agent
pointed out that the purchaser signed a contract providing that "Buyer is
. . . aware that Broker makes no representations with respect to . . . square
footage of the subject lot or the improvements thereon. Information, if any, on
square footage provided in the Multiple Listing Service, including, without
limitation, room sizes, and information materials concerning the Property are
approximations only. By obtaining
a survey of the Property or having a professional appraiser measure the
Property, Buyer may verify actual . . . square footage."
The trial court sustained the defendants'
position and granted a motion submitted by the defendants for Summary Judgment,
a procedure by which a court will grant judgment if declarations submitted on
behalf of the parties "show that there is no triable
issue as to any material fact and that the moving party is entitled to judgment
as a matter of law." The Court of
Appeal reversed this decision of the trial court and ordered the matter to
proceed to trial.
The Court of Appeal observed that "a
statement couched as an opinion, by one having special knowledge of the
subject, may be treated as an actionable misstatement of fact", citing
another case in which an owner salesman asserted that a foundation was properly
built when in fact it was not.
Whether a statement is merely an opinion
for which no action may be brought or is an actionable misrepresentation of
fact is a question of fact for the jury.
The Court thus concluded that:
"Given the rule that an owner of real property is
presumed to know the size of the property and that a buyer is ordinarily
entitled to rely on the owner's representation of size without having to hire
an expert to discover its falsity, a jury could reasonably find that a grossly
erroneous "approximation" of size is an actionable
misrepresentation."
The moral of the story? Whether selling a home or a business, think
before speaking. You might have to later
explain your words to a jury!
[This column is intended to provide general information only and
is not intended to provide specific legal advice; if you have a
specific question regarding the law, you should contact an
attorney of your choice. Suggestions for topics to be discussed
in this column are welcome.]
Reprinted from The Journal
Myles M. Mattenson © 2008
