In the many years I've managed Real Estate branch offices, disputes over mistakes or misrepresentations of the square footage on a listing have come up every few years. And while the industry has evolved to alert the buyer of the importance of investigating the size of the home they are purchasing, the process feels cumbersome.
Most brokers use the square foot measurements from the county tax records. We know those can be inaccurate and confusing. Tax records don’t always catch up with homes that get remodeled and added on to with, accessory dwelling units, finished basements, etc.
Listing brokers have a measure of protection in these situations, as per agency law, in that they have no duty to investigate the size of the home they are listing. Also the NWMLS listing contract makes the seller responsible for the information that is published in the MLS on their home. Add to that disclaimers or admonitions to buyers to verify information on marketing materials plus due diligence opportunities in the contract and listing brokers are reasonably protected from honest mistakes.
The selling broker has similar protections, starting with the same agency characteristic of not having a duty to investigate and the contractual opportunities for a buyer to discover the actual size of a home. In the NWMLS these of course are paragraph 1 of 22D which points out that no one is guaranteeing that the size of the home represented in the listing is accurate, Paragraph X in form 21 deals specifically with misrepresentations in the listing and the inspection condition on form 35.
The issue for buyers is that even with these protections, without specifically asking the inspector to measure the home, which rarely happens, or without hiring an appraiser to measure the home, the square footage is not usually verified until the appraisal is finished. This can happen long after the time frames have elapsed for the due diligence. So buyers are alerted to the possible issue and brokers have alerted the buyer and have no duty to investigate themselves. And yet the normal process leaves the square foot issue for the appraiser, which as we said falls outside of the time frames, in inspection and paragraph X.
The current contracts and the evolution of the law which alerts buyers to the possibility of a misrepresentation of the size of the home and gives them the opportunity to verify the square footage seems well intentioned and pragmatic. And the fact that major issues in this area arise somewhat infrequently may mean that "it ain't broke". But perhaps an evolution in the process is in order. Should inspectors add the measurement of homes to their services? How much would it add to the cost of the average inspection? Would it be worth it for the buyer and seller to know, during the due diligence period, the actual size of the home? And would it help avoid those major issues that crop up every so often?
I think it is worth talking about…
EJ Bowlds, Principal Managing Broker -Mercer Island
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