QUESTION: Several years ago, I represented a buyer
who purchased a condominium. The unit had been listed in the MLS and the
listing agent reported the unit as having 900 square feet of living
area. My client purchased the property and lived there for several
years. He recently asked me to list the unit for sale. As part of my
regular practice whenever I list property, I measured the unit and
discovered that it only has 820 square feet of living area. I am
concerned that my client will be upset with me over my failure to verify
the square footage when he purchased the property. Do buyer agents have
a duty to verify reported square footage in every transaction?
ANSWER: We have written previously about the responsibilities of listing agents to provide accurate information if they choose to report the square footage of their listings in their advertising. But buyer agents have responsibilities as well.
The Real Estate Commission has published Residential Square Footage Guidelines which can be viewed on the Commission's website under the "Publications" tab. On page 6 of that publication, the Commission writes as follows: "Generally speaking, an agent working with a buyer (either as a buyer’s agent or as a seller’s agent) may rely on the listing agent’s square footage representations except in those unusual instances when there is an error in the reported square footage that should be obvious to a reasonably prudent agent. For example, a buyer’s agent would not be expected to notice that a house advertised as containing 2200 square feet of living area in fact contained only 2000 square feet. On the other hand, that same agent, under most circumstances, would be expected to realize that a house described as containing 3200 square feet really contained only 2300 square feet of living area. If there is such a “red flag” regarding the reported square footage, the agent working with the buyer should promptly point out the suspected error to the buyer and the listing agent. The listing agent should then verify the square footage and correct any error in the information reported."
Based on the Commission's own guidance, your failure to notice an 80 square foot discrepancy in a condo listed as having 900 square feet does not mean that you would definitely receive discipline by the Commission. However, that does not mean that your buyer client might not file a lawsuit in an attempt to hold you and your firm responsible for damages. The best suggestion we can give to buyer agents: always think carefully about the square footage being reported. When in doubt, tell your client... and ask for verification.
NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.
ANSWER: We have written previously about the responsibilities of listing agents to provide accurate information if they choose to report the square footage of their listings in their advertising. But buyer agents have responsibilities as well.
The Real Estate Commission has published Residential Square Footage Guidelines which can be viewed on the Commission's website under the "Publications" tab. On page 6 of that publication, the Commission writes as follows: "Generally speaking, an agent working with a buyer (either as a buyer’s agent or as a seller’s agent) may rely on the listing agent’s square footage representations except in those unusual instances when there is an error in the reported square footage that should be obvious to a reasonably prudent agent. For example, a buyer’s agent would not be expected to notice that a house advertised as containing 2200 square feet of living area in fact contained only 2000 square feet. On the other hand, that same agent, under most circumstances, would be expected to realize that a house described as containing 3200 square feet really contained only 2300 square feet of living area. If there is such a “red flag” regarding the reported square footage, the agent working with the buyer should promptly point out the suspected error to the buyer and the listing agent. The listing agent should then verify the square footage and correct any error in the information reported."
Based on the Commission's own guidance, your failure to notice an 80 square foot discrepancy in a condo listed as having 900 square feet does not mean that you would definitely receive discipline by the Commission. However, that does not mean that your buyer client might not file a lawsuit in an attempt to hold you and your firm responsible for damages. The best suggestion we can give to buyer agents: always think carefully about the square footage being reported. When in doubt, tell your client... and ask for verification.
NC REALTORS® provides articles on legal topics as a member service. They are general statements of applicable legal and ethical principles for member education only. They do not constitute legal advice. The services of a private attorney should be sought for legal advice.
© Copyright 2016. North
Carolina Association of REALTORS®, Inc. This article is intended solely
for the benefit of NC REALTORS® members, who may reproduce and
distribute it to other NC REALTORS® members and their clients, provided
it is reproduced in its entirety without any change to its format or
content, including disclaimer and copyright notice, and provided that
any such reproduction is not intended for monetary gain. Any
unauthorized reproduction, use or distribution is prohibited.
Bill Gifford, Martin & Gifford, PLLC
1 comment:
Great Advice. I think this is a very big issue in NC since we sell homes by price per square footage. Just closed on a townhome in Raleigh that was a FSBO, and I represented the Buyer. When picking up the keys for the "walk through" before the Closing, the Seller stated he had not paid much attention to the Appraisal Report, which we shared. He is convinced the appraiser understated the sq footage by approximately 200 sq ft, and caused him to reduce the price of his property by thousands. We went on the numbers on the appraisal, however, the other identical units were reporting higher sq footage. (I am now thinking - hmmmmm. . . maybe having a Realtor represent you in this transaction would have been advantageous?) Sq footage is a very big deal in our business. It is how we price property to sell, and how appraisers give lenders the thumbs up or the Sellers bad news.
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