Lawsuit over square footage exaggeration

It is interesting, but looks like a tough case to win because they offered rescission and there is nothing terribly unique about the unit. However, since the legal fees and costs are almost zero, he is doing it on principle (as he says), so good on 'em. Nice shout-out to SE in the article.

And a nice shout-out to his own law firm!
It's a bit of a nuisance suit, since he could have had what he most likely will "win" from Two Trees, but NY developers are really hard to like, so not too much sympathy. The newer developments in particular have taken outrageous liberties with facts.

There is that pesky counter sue by Two Trees. Wasn't very clear what Two Trees was suing for or for how much.

Isn't this moot since NY is a "buyer beware" state. Not exactly sure if caveat emptor can be used. Though, I do hope some good - something, anything will come of it.

I agree with the points in the other thread that "duh, developers do this all the time" and that the damages theory here is "novel" (at best), especially since the guy was offered a make-whole payment, but this situation cries out for a regulatory solution rather than a court one. In such a highly regulated area, this kind of crap should not be tolderated. Some big-ass fines would stop the practice.

I agree with you both. Hopefully this lawsuit and the PR generated gets some action from the AG. It's ridiculous to have a system where the con artists win.

but isn't he the con artist in this case?

How were they planning on fitting 2 beds and 2 baths in either 743 square feet or 634 square feet?

They marketed a 634sf habitable space apartment as 1,137sf. Is that not a con?
It's kind of terrible that the worst outcome under the current system is a refund, no harm, no foul. Imagine if we did that with all thieves: if we catch them in the act, you get to keep your property, otherwise it's theirs to keep. It's purely awful public policy.

They are the only party in the building involved in a suit of this nature?

If I'm not mistaken, there was another guy, a swm who also was a lawyer that sued over square footage discrepancies. Can't find the link right now...

One has to love lawyers who are duped in this manner. Caveat Emptor is clearly New York State law. The unit was unseen before purchase. And the remedies are pre-agreed in the contract. Do you want this lawyer representing you?

it seems to me that this town doesnt like to make laws that result in alot of "work" for people... so, this will be dismissed or it will fail, and buyer beware will remain the norm.

like CC and Taxes, Sqft is something that can easily be verified.

Well, certainly the doctrine of caveat emptor imposes a duty on the buyer to inspect, which is why this case is more an example of consumer fraud where the regulators need to step in. It's false advertising and should be prevented on a system-wide basis. But the remedy for the individual here is what he passed up -- his money back.

maly, I'm no fan of new condo developers but this one isn't as egregious as you think it is.

Take another look at the story, the 1,137 sf marketed included bathrooms and closets, which I don't think were at issue.

ali r.
DG Neary Realty

Under NY law (Chimart?) a sophisticated buyer cant claim fraud when he possesses the
means of learning the truth about a factual representation, and does not act in a
reasonable manner to learn that truth.

Misrepresentation is reprehensible, but that's why I have measured the square footage
of everything I have ever bought - or rented out - to determine actual size.

The refusal to accept a refund also sets up an unclean hands defense to the plaintiff's
claim, and the rule that knowing acceptance of a breach of contract waives the breach.

Though there may be a carve-out where you can waive and due for fraud-related damages,
this plaintiff has not been injured by his seller, but by how own refused to accept a
refund.

Sounds at best like a jump ball.

There is a difference between a resale and a new development bought on plans. How can the consumer do his own measurements? He signed the contract in a very unequal position, so we're back in a system where at worst, the offending developer refunds the money he has been holding for a few years. Head I win, tail you lose.
In a resale, the prospective buyer could have measured the unit prior to signing the contract. In this case he couldn't. Doesn't it make a difference?

yes, I suppose if a buyer purchase a unit pre-build and was promised a certain number of square feet, then there is an issue. Question becomes, is it a martin act issue only enforcable by the AG (in theory) or is it common law fraud?

gcondo/maly:

The First Department in Horn v. 440 East 57th Street, 527 NYS2d 1 if memory serves
me corroectly, or maybe 525 NYS2d 1, ruled that material misrepresentations in a coop
offering plan could be sued upon as common law fraud.

Maly, your point about pre-construction measurement is well taken. However, once res-
cission is offered, a buyer's only remaining damages would generally seem to be for
reliance-induced losses, e.g., legal fees, lost interest on down payment.

And since prices have declined since the contract in question was signed, rescission
confers a substantial economic benefit.

As for pre-construction due diligence, it would seem to be sufficient to insert a
rider into the purchase contract giving the buyer the right to confirm size once
the unit is rough-finished, and to rescind for material differences in size.

547 N.Y.S.2d 1, 5 (N.Y.App.Div.1989)

I bought a Rolex today on Canal Street. Looking pretty good.

Interesting case. The issue was misrepresentations by the sponsor when selling unsold shares to Horn, an investor. The offering plan (or rather, the amendments to it) was OK.

Sponsor, rather than increase maintenance sufficiently to cover expenses, instead burnt through the reserve fund. The co-op, after Horn bought the shares, then had to drastically increase maintenance.

Horn somehow missed the disappearance of cash between one year's financials and the next, and so didn't grasp that co-op was running at a loss.

2,787 open houses FLMAOz

Did you mean FLAMEOz?

http://www.google.com/search?q=FLMAOz

I think this case is ridiculous because it is not a normal buyer fighting, it is a lawyer trying to make a name for himself and his law firm. I bought a new development and there are things as simple as the toilet being probably one level lower then it is supposed to be and probably square footnate that is not perfect. For instance it includes the common area i paid for in the building, so it is hard to figure out exactly what my square footage should have been. However I would never think of suing for damages if i found something that would in essense get me money back and it was offered.

This case while pointing out the fact that the living area square footage was lower than promised part of it is subjective depending on if they actually measured inside or from outside, etc.

the developer it seems tried to offer all money back and the buyer wanted a lower price. The developer offered in my mind what was fair and the buyer kept going after him and now after refusing to release the developer from the contract and taking back his deposit, is suing for lost time and investment in this apartment that he refused to either walk away from or close.

From what i read it seems the building is not the best of construction and he should of been happy to get away.

This is just an example of someone trying to make extra money when none is due. although it is not really costing him so much to fight it since he is really doing the suit himself with a partner from his firm acting as lead.

I actually hope he loses and that a case brought from someone who was actually wronged because they were not allowed to walk away from a breached contract with their deposit money back wins instead.

Mikev, not sure why this is a surprise. Developers develop. Lawyers sue.

and hfscomm1 lies.

http://www.columbiapa.org/prison/index.php

Went to an open house today where broker was refusing to quote sq footage even though she listed at 2300 sq foot and she said poeple measure it between 1800-2100.

"This case while pointing out the fact that the living area square footage was lower than promised part of it is subjective"

Why should sq. footage be subjective?? it is a measurement. When done in a standard manner should not be 'subjective'. That is like saying that a blood pressure measurement is 'about' 120/80. If you have problem wouldn't it be nice to know that the results are measured using a standard reproducible method.

I am not arguing about whether or not there should be a standard, as there should be, but what is common practice across the whole industry. Why else could you have two identical apartments up for sale in a coop and have two different measures of square footage.

While it may be easier to buy when you could actually see the final product and decide for yourself what the square footage is and how much it is worth to you, this was a new construction and when the guy figured that it was less than what he was promised they offered to let him out of the contract. it was his choice to decide to spend years fighting this and take the developer to court. All i was saying is that this is one time when i want to see him lose because i honestly do not understand what he is fighting for.

I had a coworker lose 10k on a townhouse in jersey because she had a valid out of the contract and the guy she was buying from refused to let her out. She only finally got her money when he tried to sell to someone else and she put a lien on his property.

This guy i do not care what anyone says is just trying to make a name for himself. If he wins his little tiny law firm should be able to get a nice amount of new clients looking to pull the same crap. although since these days there really is no frenzy and no one buying prior to seeing, he probably will not get to many.

specific performance?

Alan, remember this was a BOE building.

I hope this guy wins and wins big. I don't see why real estate is any different than any other commodity. If I buy a box of cereal, and it says 16 oz, it is required to be 16 oz, simple as that. This coy BS on the part of RE agents has got to stop. They sell their product by the sq ft, yet they can claim the sq ft varies? What? Why have they been allowed to play this game for so long?

If I buy a size 42 suit, I have the right to expect a 42, not a 38. If I buy a gallon of gas, I have a right to expect a gallon, not a half gallon. Simple, why is RE the exception?

And the guy does deserve compensation, he was told he was buying a specific product, stopped looking at other RE, and spent months waiting for completion. His RE hunt was basically sidelined and he probably missed other opportunities. I think if he wins, we all win.

But I think I know how the RE agents will react: no sq ft listing at all, just a verbal guesstimate, which will give the RE agents even more room to lie and fudge, unless you have a tape recorder.

If anything he bought when the market was higher and is only helped that he was allowed out of the contract and could have purchased elsewhere lower.

When i go to a store such as nordstrom and my suit pants began to fall apart before there time, I went in and they took care of me and gave me a new suit. Did I sue because I was embarrased when they ripped or felt that they should have given me an extra suit?

If you are made whole then what specificaly are you looking for. Read the article, he made the decision to fight this for years, live in rentals, blow through money and time and sell off or give away wedding gifts because he thinks he is proving a point.

The product was available and final measurements were off, he was given the options that fell within the contract.

So I ask again how was he hurt if he was let out of the contract and offered all the money back, including i would assume the interest on the escrow for his deposit?

This is not to say that the games with square footage should not stop, but if anything it is an expected although annoying part of the whole game of buying an apartment.

This moronic lawyer has been fighting this for over 3 years now. I think part of the problem is he is stuck now, if he gives in he admits he wasted 3 years and a ton of money, if he goes to trial I do not see how he gets or then just his deposit as it was offered years ago and he refused it. And honestly if he does get more then the system is broken. If he had actually closed and then found all this out, then maybe i would side with him because he accepted in good faith that the apartment was what was represented in the plan. The fact that it was a bit smaller in the living area being found prior and he was given an out, then i do not get it.

Also the one thing that is never touched on is that at least the way i read it the apartment is about the total square footage it is supposed to be, so it really is just how the walls and all were put up.

As I already said if he was not representing himself he would not be in this situation as he would have taken the money back years ago or just closed. Hell if he just took the money and waited he would have a bigger apartment for the same money right now.

Good points, Mikev.

But if he doesn't win big (regardless of the logic or lack of logic behind a pay out) there will be no incentive to change the system. That's the only reason I want the obviously self-promoting shyster to win. So that it will set a precedent with dollars attached to it.

Otherwise the brokers won't change their game, they speak only in dollars.

>Otherwise the brokers won't change their game, they speak only in dollars.

That size 42 suit, do you try it on before making the purchase?

You also have to remember this guy bought during the lets be stupid and put down money on a drawing and a dream. Always have to have the buyers beware going.

I understand the need for a precedent, however, once again this goes to this is the most grey area involved in real estate. When i looked and bought i did so based on what i saw and the value, i took the square footage measurement with the trust it should be given, zero. Although i did take the drawing from the condo plan and measured some rooms prior to buying and they were pretty close.

I wonder if this guy would sue if he found out that after buying a new car for 30k and being told by the car salesman that he got a great deal, that he would go back a week later when he found out someone else got it for $28k and then sue for all the damage inflicted on him. The end problem is we are a lawsuit happy country. And since he was not being forced to close, he gave up his own time and money here and was not forced to. He thought the developer would balk and say your right lets lower the price by over 10%.

That's why this case is really one for the regulators. The laws against false advertising and "bait and switch" are to keep merchants from wasting consumers' time and money. The lawsuit here is really a blunt instrument when the better approach would be for the state regulators to clamp down by imposing big fines on developers and brokers. Regulation is why Nordstrom will not advertise that it has size 42 suits on sale when in fact it has no such size in stock. There is absolutely no reason from a regulatory point of view to let people inflate square footage. It's not puffery; it is lying in order to get financial gain.

Yes but at the end of the day you are paying for the apartment based on comparable apartments. I think for the most part people are smart enough to understand what they are paying for. The fact is that he was asking for a reduction in price that was not in line with what others paid for a similar apartment. He is arguing based on living area and not on total square footage. That i think is the part i do not understand.

The total square footage according to the article is not in question. It was how the final apartment was put together that caused him to have issues. So even if you wanted to argue that there is a psf number that you should pay, the total square footage is the same. He is going off on the fact that the livable area may be slightly smaller because the closet, or bathroom, etc was made slightly bigger.

So where exactly is the lie we are fighting over here? Now if it was advertised as 1300 sf and the total was 1100sf then i would understand what the fight was all about.

>The end problem is we are a lawsuit happy country.

Perhaps you can say that. But this is a lawyer. He's a lawsuit happy lawyer. And there's not enough going on at his firm because his partner is the one representing him.

>Regulation is why Nordstrom will not advertise that it has size 42 suits on sale when in fact it has no such size in stock.

Really? Is regulation also responsible for the piano player? Give me a break.

>when the better approach would be for the state regulators to clamp down by imposing big fines on developers and brokers.

Oh good, more regulation. This time to protect an educated buyer who is familiar with the contract and state law, and was foolish enough to enter into a material contract without seeing the property.

Of course you can return a car purchase within a specified time frame (varies by state).

I vote for him to win. The greedy and outright fraud practiced by NY developers and real estate personnel has gone on long enough. I can only imagine you'd be against correct sq footage AND cubic square footage (height of ceilings) is if you are a developer and family or real estate personnel and family.

At this point I agree with you on the case specifics, Mikev. It does seem he's asking a lot.

But I am still firm on the broad generality of the listed square footage; it should be what it Actually is. MidtownerEast and I agree on this, I think.

There are laws "protecting" people from putting plastic bags over their heads (though I wish they didn't print the warning, we could do with a few less morons in this world), why aren't there laws protecting buyers from being misled about the biggest investment most will ever make?

I'm not for a Nanny Nation, but I am for a size 42, that is really a 42.

^--- You're going to hate buying clothes even more once the "vanity sizes" from womens labeling makes bigger gains in the mens market.

Well aren't we all for square footage for the apartment. I actually have never seen square footage quoted in terms of total livable area, they quote for the whole apartment, which in this case is not in dispute. He is fighting over livable. So my point was that if an apartment is sold based on a psf amount, it still has the same total sf and therefore his asking for a reduction does not make any sense whatsoever.

As a former architect, I can tell you there is absolutely zero ambiguity about the square footage of a building, particularly new construction.

http://www.boma.org/MEASUREMENTSTANDARDS/Pages/default.aspx

A lawsuit with substantial damages is the only way to stop this practice and every "insider" knows it goes on and that it is, in fact, fraudulent.

Is it common that the developer is so willing to give back the deposit if the purchaser challenges the sf measuremnt. it seems to me that, esp in a declinig market, the developer would fight vigorously to uphold the wording of the contract. although that wording as everyone says can be confusing/deceiving-- the AG approves the offering plan.

I agree that I don't think he will win the lawsuit. As I understand it, Two Trees followed the law in marketing the unit, and rescission was offered as prescribed by law. He just didn't like what the law prescribed.

Personally, I find the law itself to be a bit ridiculous. Everything else is regulated, but we can't all agree on a simple way to measure square footage? Practices like including the common areas in the square footage... really? When you sell a house, do you include the square footage of your lawn when describing the house? After all, I do have access to use it. I was quite surprised when I learned about this years ago.

Slight differences in square footage are one thing... but there are no amount of construction tolerances that can describe some of the large differences that are all too often seen between what is quoted, and what the actual square footage is.

I understand caveat emptor... but that doesn't stop other industries from being regulated (e.g. you must provide 16 oz if you advertise 16 oz).

I blogged about this topic today, over on http://blog.urbanedgeny.com/apartment-square-footage-how-to-measure-is-no

And how about appraisals, I mean we all know they are rubbish anyway as they always seem to magically appraise for the contract price.
But the appraiser will actually measure the apartment being appraised yet be left to the advertised footages of the apartments they are comping to.

http://www.nytimes.com/2011/04/06/nyregion/06square.html?_r=2

Suit Over 109 Square Feet Ends in a $150,000 Settlement

...agreed that Two Trees would return the Bhandaris’ deposit with interest, or $81,077, and pay the couple an additional $150,000 to terminate the contract. In return, the Bhandaris promised not to buy or rent in a Two Trees building for four years.

"Why can we regulate sq footage?"
Industry is too fragmented. Class action suits usually are filed against people with deep pockets. Also, politicians get a lot of money from real estate developers. However, other countries have regulated sq footage.

Other COUNTRIES? Try THIS country in a lot of places outside of NY!!!!

It's not rocket science. Also, in at least some (most?) counties, square footage is used to determine RE taxes ... so it's live/die by sword if you want to fluff the numbers.

I like that this plaintiff refused the $20K gag-ag money, and that part of the agreement was that they wouldn't buy or rent a Two Trees property for a couple of years after. As if!

So the lawsuit was over the size of the living area? I see they didn't complain that the rest of the space was bigger than advertised.

It was about the dimensions of the three main rooms, and therefore their area. They didn't dispute the 1173 total or whatever it was.

The architect's CAD files showed one set of dimensions, but when the floor plans for the offering plan were created, the dimensions became larger. The as-built condition matched the CAD files.

If they didn't dispute the total, wouldn't that mean the area in the non main rooms was actually bigger than the offering plan?

Yes, but the extra 109 ft² wasn't consolation. I'd pooh-poohed the case too, but apparently the Bhandaris had relied on a room being, say, 12x15 in making their own renovation plans, so it being actually 10x14 or whatever threw a wrench in the works.

Their case against the architects was dismissed for some reason, but the docs filed at eCourts are pretty convincing. The construction plans said one thing, and the numbers were jacked up when the plans for the offering plan were prepared.

Will we soon get tv commercials from this plaintiff / lawyer and his partner? "We will FIGHT for YOUR rights. 24/7 we'll be there for YOU"

Could turn out to be a bigger money-maker than asbestos.

Testimonial, when my family couldn't fit into the apartment, we didn't call a locksmith, we called Mandel Bhandari, they were there for us.