Broker Held Liable for Misrepresenting Square Footage
In the recent case of Furla v. Jon Douglas (1998) 65 Cal.App.4th 1069, 76 Cal.Rptr.2d 151, a California Appellate Court held that a home buyer was entitled to rely on the square footage description in the multiple listing service, and the listing agent could be liable for misrepresenting the square footage absent a specific dis-claimer stating that the agent has not verified the information.
Factual Background
In this case, the defendant Jon Douglas listed a Southern California property on the MLS as "APX: 005500," meaning approximately 5500 square feet. The bottom of the listing included the standard disclaimer that "Information Deemed Reliable But Not Guaranteed." The Jon Douglas agent obtained the square footage information from the sellers’ daughter, who provided to the agent architectural plans that were used to construct the property. These plans showed the house to be 5500 square feet. In addition, in the agent’s own inspection she saw no indication that the house was not 5500 square feet. In fact, she obtained a computerized property profile through a local title insurance company showing the property to be 5500 square feet.
The buyer of the property was a stockbroker looking for real estate bargains based upon the square footage of homes. The real estate purchase contract contained a disclaimer provision regarding square footage. Nevertheless, he purchased the home based upon the square footage.
Two years after the purchase the buyer decided to sell the property. He hired an agent from another company to list the property. The new agent looked at the home and said the property was not 5500 square feet. The house was subsequently measured and it was determined to be 4500 square feet. The buyer sued the Jon Douglas listing agent for negligent misrepresentation. The trial court granted summary judgment in favor of the agent but the Appellate Court reversed.
The Court Ruling
The court held that under Civil Code Section 1088, if an agent puts information on the MLS the agent "shall be responsible for the truth of all representations... of which that agent... had knowledge or reasonably should have had knowledge."
Jon Douglas argued that the plaintiff was on notice that the representation as to square footage was only an "approximation". However, the court concluded that "the estimate of 5500 square feet was not merely inaccurate, it was grossly inaccurate, by more than twenty percent." The court went on to cite the dictionary definition of "approximate" which was "near to, about; a little more or less; or close." The court concluded that the square footage representation was not "approximate".
Editorial Comment
This is a common mistake but an unusual ruling. A number of square footage cases that we have handled at Bowles & Verna have resulted favorably for the agent. Admittedly, none of the representations were "off" by 20%. The Furla court suggested that the agent should have included a specific disclaimer. For example, the court may have ruled differently if the agent had stated the precise source of the square footage information, i.e., the original architectural plans and the computer print-out from the title company. The court was troubled by the size of the error in the square footage.
This case also highlights the misconception among some brokers that if they include "approximate" on disclosures such as square footage that it completely absolves them of potential liability.
Please note: This publication is intended to provide accurate information. However, the authors do not intend this bulletin to constitute, or be a substitute for, legal advice or assistance from a real estate attorney. If legal assistance is necessary, please consult your personal attorney.
About the Authors/Editor:
K.P. Dean Harper has tried and arbitrated over forty cases. He specializes in real estate and broker liability litigation and edits the Bowles & Verna Real Estate Bulletin, a periodic newsletter for real estate brokers. To contact Mr. Harper by email, click here.
