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Listing Agent pays buyer for square footage - OUCH

Our senior broker sent an email today reminding us to be careful. In these uncertain times, strange things can and do happen.

 

Liability for Inaccurate Square Footage

A Texas court has considered whether a listing broker was liable for providing inaccurate square footage information.

Jason and Ashley Bradford (“Buyers”) became interested in a home owned by John and Beatrice Vasquez (“Sellers”). The Buyers had determined that the property had a lower per square foot price than other similar properties by using the property’s information provided in the multiple listing service (“MLS”). Margaret Pleasant (“Salesperson”) of Mark Bowles d/b/a Prudential Synergy REALTORS® (“Brokerage”) was the listing representative for the Sellers’ property.

The Salesperson had obtained the property’s square footage information from the Bell County Appraisal District, a local government agency. The Brokerage’s usual practice was to indicate in the MLS the source of the square footage information, but allegedly did not in this instance because of a clerical error.

The Buyers visited the Sellers’ home, after which their real estate representative, Angela Bruce (“Buyer’s Representative”) asked them to sign a release (“Release”) stating that they had not relied upon any statements “made by the REALTOR and his/her associates”, and only relied upon information received from the sellers, third parties, or information that the buyers had independently verified on their own. Both the Buyer’s Representative and the Salesperson were members of a REALTOR® Association. Both the Buyers and Sellers also signed this form.

The Buyers made an offer for the property and the Sellers accepted it. Five days after the closing, the Buyers received a copy of the appraisal report prepared by their lender’s appraiser and learned that the property was 253 feet smaller than had been listed in the MLS. The Buyers filed a lawsuit against the Salesperson and the Brokerage. The jury found that the Salesperson had violated the Texas Deceptive Trade Practices Act (“Act”) and awarded the Buyers damages. The Salesperson and the Brokerage appealed.

The Court of Appeals of Texas, Austin, affirmed the trial court. The Salesperson and Brokerage first challenged the Buyers’ reliance upon the alleged misrepresentation. “Reasonable reliance” is a necessary element for a consumer fraud complaint, requiring that a party not ignore information which would cause him/her to question the truth of the facts upon which he/she is relying. While both Buyers had testified that square footage cost had been a key technique they used for identifying suitable properties, they also testified that: they had had lived in the home thirty days prior to closing; they had also visited the same government agency website where the Salesperson had obtained the erroneous square footage information; and the Buyers had signed the Release.

The court rejected the argument that the Buyers living in the property prior to closing should have alerted them to the property’s actual size. This argument was based on the fact that the Buyers had made repairs on the property, and so they would have measured these areas during the work. The court found that while living on the property would have given the Buyers the opportunity to investigate the actual square footage for the property, it did not impose upon them to do so and did not destroy their reliance on the erroneous figures provided by the Salesperson.

Next, the court examined whether the Buyers visiting the government appraisal website destroyed the Buyers ability to claim reliance on the information provided by the Salesperson. The Salesperson argued that the website visit by the Buyers showed that they were investigating the accuracy of the square footage information. The Buyers countered that they did not go to the government website to confirm the square footage information; instead, they went to the website to learn other details about the property, such as tax information. The court found there was no evidence demonstrating that the Buyers had independently verified the square footage information, and so the court denied this argument.

Finally, the court considered whether the Release protected the Salesperson and the Brokerage, since they were also REALTORS®. The Release was printed on the Buyer’s Representative’s letterhead. The Buyers also testified that the Sellers had not yet signed the form when they (the Buyers) received it, and they understood the form to only cover the Buyer’s Representative. The court found that the jury had evaluated the evidence and its conclusion was supported by the evidence, and so the court dismissed this challenge as well.

The court also upheld a challenge to the damages awarded in this case, which the jury had computed by looking at the difference between what the Buyers thought they were getting in square footage and the actual square footage. The Salesperson and Brokerage tried to show that the jury had improperly arrived at the damage figure because there were conflicting expert opinions, but the court ruled that the jury had sufficient information to arrive at the damage figure. Thus, the court upheld the award.

Pleasant v. Bradford, No. 03-07-00167-CV, 2008 WL 2544814 (Tex. App. June 26, 2008). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information].

Ron Margolis, RA, CDPE, ABR Hawaii Life Real Estate Services 808.346.7095 email: ron@hawaiilife.com

Comment balloon 59 commentsRonnie Margolis • September 25 2008 10:16PM

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