After reading a recent New York Times article about discrepancies between advertised and actual square feet in real estate deals, I began to wonder who is really responsible for accurate measurements and what possible remedies a buyer could have.
The article details the sale of a mansion in Malibu, California that was advertised as having over 15,000 square feet. The documents filed with county indicate that the mansion is less than 10,000 square feet. The difference between what was advertised and the actual square footage of the house may come, in part at least, from different measuring methods. While county records may only include square footage of the house itself, a real estate agent or architect may include the square footage of guesthouses, garages, or covered outdoor spaces.
While this is an extreme example of differences between advertised and actual square footages, smaller differences can lead to litigation as well. In New York, a difference of less than 100 square feet resulted in a lawsuit against the real estate broker for breaching his duty to the buyer.
Similar occurrences are not uncommon in commercial real estate, however. In New York City, commercial landlords continue to find new ways to measure spaces. For example, One World Trade Center “grew” by almost half a million square feet when it was remeasured in 2010. In fact, the inflation of usable square feet into rentable square feet has become a standardized practice through the “loss factor.”
With the relatively common practice of inflating or manipulating the square footage of commercial real estate, why are residential buyers still being surprised by square footage differences? Is this an attorney or broker due diligence failure? Besides suing the broker for breaching his duty to the buyer, what other remedies exist? It seems unlikely that real estate attorneys would not be involved in multi-million dollar home purchases, so what is their potential liability?
While the potential remedies for a buyer are unclear, real estate attorneys and brokers should discuss how the square footage of a home or commercial space is measured with their clients.