Material difference between represented and actual difference of square footage in new construction
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Material difference between represented and actual difference of square footage in new construction
I purchased a home that is new construction. The builder/developer represented the basement as 1815 square feet but it’s actually closer to 1131 for, a shortage of 684 square feet. There are 2 builder brochures which states the basement at 1815 and the sales staff have repeatedly told me it is 1815, and I have them on recording stating so. What resources, if any, do I have to resolve this with the builder, other than an attorney? And if I need to hire an attorney, do I have a potential case?
Asked on November 12, 2018 under Real Estate Law, Colorado
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
The key issue is--you say this was new construction, but does that mean that you purchased the home before it was built (contracted to have it built, for example), or that it was a just- or recently completed home that you were able to tour or view before purchasing?
The reason why this is important: fraud is when one party makes a material mistatement (lies about something important) to get the other party to do something (like buy a home), upon which the other party reasonably relies. Reasonable reliance--not having some other basis for knowing the true state of affairs, so you have to rely on the misstatement--is key.
If the house existed, even if new and not 100% finished (e.g. it was constructed, but things like the kitchen or bathroom, while existing were not complete) you could see for yourself how large the home was. A decision to purchase it could not reasonably rely on the builder's representations when you could instead rely on the evidence of your own eyes and decide if the house was large enough for you (your own direct sensory impressions "overrule" what was printed or told to you).
On the other hand, if the home was ordered or contracted before it was built (e.g. built for you), ALL you had were the builder's representations--therefore, your reliance on them was reasonable. In that case, if you bought the home because of the builder's misrepresentations, the builder committed fraud. Fraud would provide a basis to sue the builder for compensation (e.g. the difference in value between what you did pay for the home and what a home of its actual size would be worth) or possibly to rescind the purchase (return home to builder; get your purchase money back). So there could in this case be a great deal of money at stake.
If you elect to pursue a fraud claim, an attorney would be very valuable.
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