Oklahoma is letting real estate brokers and agents off the hook for inaccurate size claims of property for sale.
Size still matters, but citing the source matters more, according to House Bill 1598 by Rep. Steve Martin, R-Bartlesville, and Sen. Clark Jolley, R-Edmond. Gov. Mary Fallin has signed the bill; the law takes effect Aug. 9.
The Oklahoma Association of Realtors said it asked for protection for realty brokers and agents, most of whom are Realtors, in response to the 2009 state Supreme Court decision in Bowman v. Presley. In the case, an agent and others were sued in a fraud claim after buyers determined that a house was several hundred square feet smaller than presented.
A state real estate license holder — an agent or broker — is not required to provide the size of a property “in square footage or otherwise,” according to the law, but if a size is provided it will not be considered a guarantee of accuracy.
If the size is provided, the source of the information must be cited. The law cites four types of sources: an appraisal by a licensed appraiser; a survey or developer's plan by a licensed surveyor; a tax assessor's record; or a builder's plan used to construct or market property.
Under the law, a broker or agent is not responsible for size accuracy and has “no duty to the seller or purchaser of real property to conduct an independent investigation of the size or area, in square footage or otherwise ... or to independently verify the accuracy of any third-party information.”
A touchy subject
Size claims can be touchy in real estate transactions. In 2004, after a similar court case, the Central Oklahoma Home Builders Association opted not to mention the square footage of houses in its annual Parade of Homes, although individual builders in the parade could do as they wished.
Builders said pricing houses per square foot made little sense when lot prices and level of finish can drastically affect how much a home can fetch on the market. But litigation triggered the decision to delete square feet.
Sellers and their Realtor had listed a home as “3,000 square feet more or less.” The buyers later discovered it to be only 2,675 square feet. The buyers sued, the sellers' defense was caveat emptor — “let the buyer beware” — and the trial judge granted summary judgment in favor of the sellers and Realtor.
The buyers appealed, claiming that the sellers and Realtor could be held liable for “material misrepresentation.” The Oklahoma Court of Civil Appeals agreed and sent the case back so a jury could decide whether the misrepresentation amounted to fraud, which is where the case stood at the time of the 2004 Parade of Homes.
As for the 2009 Supreme Court case and the new law, most Realtors already cite the source of square footage detailed on their listings, such as “courthouse” (for assessor) or builder, said Charla Slabotsky, vice president of government affairs for the Oklahoma Association of Realtors.
The law will make it easier for Realtors to talk about it, which will help home shoppers make decisions, she said. The 2009 decision hushed most such talk, Slabotsky said, by holding an agent responsible for a size claim.
In that case, buyers paid $145,000 for a house in Shawnee that sellers and their agent said had 2,890 square feet, but after closing on the purchase they received a mortgage appraisal showing it had just 2,187 square feet. The buyers learned further that the ones who sold them the home knew its actual size because the mortgage appraisal tied to their own purchase of the home in 2000 determined it to be 2,187 square feet.