CONTRACT DISPUTES/REAL ESTATE: Buying a House? Don’t Believe What They Tell You

The SPDS is a major component of every house sale.  It is a multi-page document in which the seller is required to answer a number of questions about his knowledge of problems with the house.  Is there a history of bugs?  Has there ever been flooding?  Who maintains the streets?  The SPDS covers most of the areas that a buyer might be concerned about.

But there are some things that seem so obvious that they don’t need to be included in the SPDS.  One of those is the square footage of the house.  That information is put on the Multiple Listing Service (MLS) by the selling agent.  No one questions that number.  It comes directly from the seller and his broker, the two people who would know.

 

But thanks to a recent Court of Appeals decision, you can no longer rely on that number in Arizona.

 

In that case, the buyer bought in reliance on the square footage listed in the MLS.  But it turns out that the square footage was actually 600 square feet less than the MLS represented, which reduced the value of the house by $65-70,000 dollars.

 

Of course, the buyer sued.  But the Court held for the seller.  Why?  Because the boiler plate language included a provision saying that the buyer is responsible for checking the square footage himself and that the seller was not responsible.

 

As business litigation attorneys, we believe this is a horrible decision, threatening to return house buying to the caveat emptor (buyer beware) of the 19th century.  But the parties settled before taking the case to the Supreme Court, so for the moment at least, that is the law.

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