Oklahoma Supreme Court Makes square footage a material fact

By
Real Estate Agent with The Virtual Real Estate Team 104556

Is the house 1801SF or 1822SF? Try back Later!The Oklahoma Surpeme Court recently ruled that square footage is a material fact and that a BUYER can RELY on what a real estate agent tells them regarding square footage as a fact. Because of the ruling any lawsuits based on what someone belives is an erroroneous representation of the size will go to a jury trial and not a summary ruling by a judge. This is now the LAW. Therefore quoting square footage incorrectly is considered FRAUD. Since the ruling, as you would expect, the number of lawsuits based on this have increased. If you are on the wrong side of a ruling as a Realtor you also have no E&O insurance since fraud is an exception.

Okay, since the Supreme Court is not going to listen to me, this becomes the only forum I can vent with. Square footage is like The Theory of Evolution. Doesn't mean it is not true, it just means that in science new discovery is ongoing and to stop changing would be to negate the science. We have a website I pay for called REDLINK. I can go there and find all the registered appraisals on a property. Guess what and I knew you would get it on the first try, if there are six appraisals there are six different figures. If it was an exact science they would all be the same, but there has to be a margin of error.

I realize that agents sometimes do stupid things. Our MLS allows an agent to put in a size and say agent measured. This is incredibly stupid, and even I won't do that although I had been certified as an appraiser in a previous life. But my question is this, at what point does a wrong footage constitute fraud.? Is the number 10 feet off, or 25, or 200? I can guess the outcome of all this. Eventually we will be going back to common law based on court decisions that will be constantly changing, and because of that more appeals. Attorneys can now offically party all the time.

I love my state sometimes, but often I despair that our "best and brightest" here are not so bright. In the meantime I now have another addendum to add to contract to try to keep me out of harms way. Our office official policy now is no addendum signed, no contract. But there is always a silver lining to any decision. All those throw them up against the wall agencies who recruit every Tom, Dick, and Jane off the street are going to be in big trouble. Without E&O I hope you have a ton of money in reserve. You are going to need it.    

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Re-Blogged 5 times:

Re-Blogged By Re-Blogged At
  1. Jason Killam 04/10/2010 09:58 PM
  2. Wallace S. Gibson, CPM 04/12/2010 05:35 AM
  3. Donald Bradbury 04/11/2010 08:09 AM
  4. Lenn Harley 04/12/2010 05:48 AM
  5. Shanna Hall 04/18/2010 01:19 PM
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Rainmaker
1,251,281
Richie Alan Naggar Author PEARLS SERIES of books
People first then business! Ran Right Realty Riverside, Ca - Riverside, CA
on LIFE and LOVE plus Real Estate too!

Tell me it ain't so......JOE

I knew this would show its ugly head one day. It may get to the point where we do not want to say anything? Good golly.......Let's work together to find the right buyer with the right seller for the right reasons. Anytime the courts get involved, we are making more complex for everyone. We cannot have rules for everything. That is why we have a code of ethics. Now, all we havve to do is follow our instincts. Thank you

Apr 11, 2010 02:20 PM #34
Ambassador
1,238,717
Erica Ramus
Erica Ramus - Ramus Realty Group - Pottsville, PA - Pottsville, PA
MRE, Schuylkill County PA Real Estate

That is a huge deal! I see square footage with really "off" numbers. I had a seller last week tell me he has 4000 square feet and the agent in the MLS listed 1500. She just copied from the county data records, and anyone walking thru there would realize it was not just off but really really off.

I also had someone recently argue over 100 square feet in a condo. They felt "ripped off" that the condo was 100 feet smaller than the builder told them it was. An appraiser plugged in 100 less feet. It came down to trying to figure out who was right and where the missing 100 feet was.

Apr 11, 2010 02:41 PM #35
Rainmaker
121,106
Mike West
Heritage Oak Properties - El Dorado Hills, CA
El Dorado Hills, CA CDPE, CNE, Licensed Loan Origi

Good for Oklahoma!  Straight forward agents use the tax roles to determine square footage.  I keep out of the argument by using that .

Apr 11, 2010 05:29 PM #36
Rainmaker
598,830
Nancy Conner
Managing Broker - City Realty Inc - Olympia, WA
Olympia/Thurston County WA

Seriously!?!  That is a pretty bizarre (& scary) ruling .  Maybe next the judges on the court can all go out to a test house and each measure and see if they can come up with the same numbers!!!

Apr 11, 2010 07:36 PM #37
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Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

I have a feeling you are going to see a lot of "Buyer to verify square footage" and "Square footage from last appraisal, buyer to verify if important"

Apr 11, 2010 08:28 PM #38
Rainer
22,295
Richard Johnston
San Fernando Valley - RE/MAX Grand Central - Sherman Oaks, CA

i always default to what the tax assessor has.  Then in the private agent notes, I write whatever the other agent may need to know.  Example: non-permitted converted garage, bonus room without permit, etc...

Apr 12, 2010 03:39 AM #39
Rainmaker
501,017
Lori Cain
Chinowth & Cohen Realtors - Tulsa, OK
Midtown Tulsa Real Estate Top Producer

Joe, the Realtors involved in the case heard by the State Supreme Court that started all of this were neglegant. While I'm not happy with this new ruling, I'm not going to change the way I do business. I am asking my Sellers to pay for a "square footage only" appraisal prior to listing, AND I am adding the disclaimer that the square footage is deemed to be correct but the burden to verify is on the Buyer.

I don't think this would ever have gotten so far if we, as an industry, had figured out a better way to measure the VALUE of properties other than by square footage.

Apr 12, 2010 05:47 AM #40
Ambassador
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Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Realtor - Ann Arbor Real Estate

In Ann Arbor we don't measure, many years ago, before I was in real estate some brokers decided it was too risky.

Now we list the square footage and tell our SOURCE:  appraisal, homeowner, assessor, measured, builder.

We are in the process of changing to upper and lower as some REALTORS put the lower (basement) and the top floors together.

It is ok for local appraisers but with HVCC is causing a mess and a challenge to appraisals.

 

Apr 12, 2010 06:51 AM #41
Rainmaker
1,636,040
Dorie Dillard
Coldwell Banker United Realtors - Austin, TX
Realtor-Canyon Creek- NW, Austin TX Homes For Sale

Good morning Joe,

In our MLS the SF listed on the tax roles auto fills. However they are very often incorrect because no one comes out to measure (the counties do not have the manpower). The most accurate form is from an appraiser even though 2 appraisers could be off by up to 50 SF (always a factor of human error)!

Apr 12, 2010 07:31 AM #42
Ambassador
420,071
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

Dorie, that is what our MLS does now. My understanding is that they are going to go to a range which the Tulsa MLS currently does. That will not solve this particular ruling but I guess it is what has to be done.

Missy, you do point out a real problem of Realtors making their own representations about SF that is wrong. In Oklahoma at least, below ground living does not count unless it is a walk out basement that some builderrs do on sloping acreage type lots. I have initiated for my board a new class run by appraisers to educate the membership.

Lori, I want to send you a copy of our addendum about SF my company had researched by a real estate attorney.  

Apr 12, 2010 07:42 AM #43
Rainmaker
259,543
Bill Travis
Captain Bill Realty, LLC - Gilbert, AZ
Broker/Owner

I use what the tax assessor says, and check that as the source. If the owner cites it, then I list the owner as the source. I do not measure, nor do I estimate.

Our AZ contract specifically states that the buyer must verify all facts tht they feel are relevant. It mentions square footage as being approximate, etc.

It puts the responsibility squarely (no pun intended) on the buyer to do their due diligence.  

Apr 12, 2010 08:09 AM #44
Rainmaker
420,591
Leslie Ebersole
Baird&Warner Fox Valley - Saint Charles, IL
REALTOR - Chicagonulls Western Suburbs

Pretty soon we won't be able to say ANYTHING to a buyer. Sad that we need to worry more about protecting ourselves rather than providing information. But as my managing broker always says "Be the source of the source" on giving information.

Apr 12, 2010 08:32 AM #45
Rainmaker
501,017
Lori Cain
Chinowth & Cohen Realtors - Tulsa, OK
Midtown Tulsa Real Estate Top Producer

Joe - I would love for you to send that to me! THANK YOU!

Apr 12, 2010 09:22 AM #46
Rainmaker
1,837,104
Gabe Sanders
the BlueWater Realty team specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Very scary stuff.  I hope this ruling doesn't spread to other states.  Soon, you just won't see square footage's on listings anymore.

Apr 13, 2010 06:47 AM #47
Ambassador
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Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

The main case has square footage as a basis but there is a lot more, and crossing lines on representation of our statue law is part of it. It was also not a small amount. Again my problem is not in saying that square footage isn't important, it is the ruling that makes it subject ot a jury trial, and the E&O compnaies weighing in on that they may not cover a court case because to them it is about fraud they won't cover. So a small descrepancy can be cause for a case, and a out of pocket expense for a realtor to defend against even a frivolous claim.

Apr 14, 2010 02:41 PM #49
Rainmaker
297,633
Ryan Hukill - Edmond
ShowMeOKC Team of Paradigm AdvantEdge - Edmond, OK
Realtor

The thing that floors me about this ruling is that it specifically states that we, as agents, are fully responsible for third-party information we use in our listing and marketing, meaning that if the appraiser, county assessor, or builder quote an incorrect square-footage figure, it's not them that's liable... it's us. You and I both know that ten different appraisers would give us ten different figures on any given house, so there IS NO SAFE WAY TO HANDLE THIS. Scary stuff, buddy.

Apr 15, 2010 10:43 PM #50
Rainmaker
1,361,686
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

You have to love a Judge I guess, about th eonly people that their Mamas don't even like ;0).

Apr 16, 2010 04:40 PM #51
Rainmaker
1,376,349
Donna Harris
Donna Homes, PLR - Austin, TX
Realtor, CDPE & ASP - Hill Country Lakeway Austin

Why can you not use a documented number and say "per tax records", "per previous appraisal", "per builder's plan"... as long as you state where you got the number, you as the agent should be covered.

Apr 18, 2010 01:40 PM #52
Anonymous
Anonymous
Dawn Kennedy

I saw many posts that said just use per tax records or per previous appraisal- unfortunately the ruling states that this does not relieve the REALTOR of liability for what is entered into the MLS. As Ryan pointed out the REALTOR is now liable for the third party information. The opinion, if I recall, specifically stated that disclaimers such as "deemed reliable but not guaranteed" did not negate the REALTOR's liability for the third party data. This is truly a no-win situation for the REALTOR- if he/she enters square footage or hands out an MLS hot sheet with it listed on the sheet they are taking on the responsibility of its accuracy and any legal claims that ensue -if he/she doesn't enter square footage and removes it from the hot sheet then they risk customer/client perception that the REALTOR is no longer the best source of information in a real estate transaction.

 

 

May 25, 2010 11:54 PM #53
Rainmaker
161,050
Ryan Case
SCA Real Estate - Anaheim, CA
877-828-0710

I just wrote a blog post on the importance of square footage in the MLS

http://activerain.com/blogsview/1904462/inputting-square-footage-isn-t-mandatory-with-your-mls-you-re-joking-right-

 

Oct 09, 2010 11:56 AM #54
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Joe Pryor

REALTOR® - Oklahoma Investment Properties
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