DEAR BENNY: In December 2007, I took title to a condominium unit that was listed on the MLS (multiple listing service) as being 1,017 square feet, according to the public records. Recently, I was going through a real estate handbook that I own, and it suggested that I have a copy of the appraisal in my files. Since I didn’t have one, I requested a copy from my bank. I was shocked to find that the bank found the square footage to be 864 square feet, not 1,017.
Before I took title, my real estate agent met the appraiser at the condo unit and said that I didn’t have to be there. The day after the appraisal, I called my real estate agent to ask if everything went OK and she said yes.
Did my real estate agent have legal responsibility to point out the discrepancy? And can title insurance help me claim anything financially at this point? Do you have any other suggestions on what I should do? –Larry
DEAR LARRY: There is an old expression that when there are two lawyers, there will be three opinions. In real estate, when you are trying to analyze square footage, you may actually get four or five opinions.
Measuring square footage has become a hotly debated topic to which there is no definitive answer. Although there are industry standards when measuring single-family houses and office and apartment buildings (which are often ignored anyway), to the best of my knowledge there are no such industry standards for measuring condominium and cooperative apartments.
The American National Standards Institute (ANSI) has published a document entitled "Square Footage — Method for Calculating" (ANSI Z765-2003). However, it applies only to single-family houses. For attached properties (such as townhomes, which we used to call "row houses"), ANSI states that "the finished square footage of each level is the sum of the finished areas on that level measured at floor level to the exterior finished surfaces of the outside wall or from the centerlines between houses, where appropriate."
Note the words "exterior" and "centerlines."
In a condominium unit, however, developer attorneys who prepare the legal documents tell me that they try to get the engineer who is preparing the measurements to follow the unit boundaries as are spelled out in those documents.
In a condominium, there are two important legal records: the declaration and the bylaws.
The former creates the condominium and contains basic concepts, including a definition of units, common elements and limited common elements.
Here’s an example of a definition of a unit from a local District of Columbia declaration:
"Each Condominium Unit includes the horizontal space between the Unit side of the exterior walls of the building and the finished walls separating the Unit from corridors, stairs, and, where applicable, to the surface of the finished walls of those interior walls which separate one Unit from another Unit. Each Condominium Unit also includes the vertical space measured from the (topside) surface of the subflooring to the finished (exposed) surface of the ceiling of such Unit." …CONTINUED
Note that this refers only to the inside of the unit. In my opinion, that is how condominium square footage should be measured.
However, many developers have opted to go the ANSI route — namely measuring from the centerline of the walls between the units. If, for example, the outside wall is 12 inches thick, that would add at least half a foot more to the overall area.
One calculates square footage by multiplying a room’s length by its width. Thus, a room that is 12 feet by 18 feet will contain 216 square feet. However, if you add the 6 inches to our example, you get a little more than 231 square feet — but no more usable (livable) space in your unit.
Why do developers want to increase the square footage? There are two reasons:
First, too many potential homebuyers are literally "hung up" on the amount of space they will get; using the "centerline" approach clearly makes the unit more attractive.
Second, adding more space will decrease the cost "per square foot," which is yet another issue of major concern to a number of consumers. In our example, if the unit price is $400,000, 830 square feet equates to $481.93 per square foot, whereas the centerline approach brings this number down to $465.11 a foot ($400,000 ÷ 860).
So to answer your questions: No, title insurance will not assist you. Square footage is not a title issue. As for the real estate agent, if she learned of the discrepancy before you took title and did not tell you about this, she may have breached her duty to you. But, as discussed above, it may very well be that both numbers are correct — depending on which formula you use.
DEAR BENNY: We purchased an investment property in another state and have discovered the assessor’s records are incorrect. When I called them they faxed me a copy of the "Certificate of Value" that had been recorded. This certificate shows the wrong address (street number) and wrong purchase price. Although the assessor shows the correct address, they show a higher purchase price ($539,000 vs. $419,900).
Will this make any difference down the line? And how can I go about getting this corrected? The company that generated the certificate is no longer around. –Teresa
DEAR TERESA: If your assessment is based on the higher figure, then you are paying more real estate tax than you should. And hopefully when the market turns around, that higher assessment will be going up.
So you should take steps to correct this immediately. Two suggestions: First, from my experience, most if not all states have an appeal procedure whereby you can challenge the assessment. The state in which your property is located may have a Web site that explains the appeal process. If not, call the assessor’s office and ask them how to go about appealing. Alternatively, a local lawyer in the county where your property is located should be able to assist you. …CONTINUED
DEAR BENNY: My wife and I moved out of state, vacating our home, in order to find new employment. We can’t afford renting our new home while paying our mortgage. We’d barely break even selling our house and we want to simply transfer the deed over to the mortgage company. Is this just a quitclaim deed transfer? I see some online services to transfer a deed. What do I need to be wary of? –Jerry
DEAR JERRY: You are talking about a "deed in lieu of foreclosure" (commonly called a "deed in lieu"). You cannot unilaterally give your house back to the lender; the lender must approve the action. So you have to discuss the situation with them. The lender may decide that it’s cheaper to take the deed than to foreclose. On the other hand, the lender may also take the position that they will be stuck with your house, and have to pay real estate tax and insurance, and may reject your proposal.
Talk to a real estate agent to try to sell. Breaking even is better than losing money. Alternatively, see if you can arrange a short sale.
DEAR BENNY: Last year there was a condominium assessment I was unaware of. It was brought to my attention six months late, because all paperwork was being sent to the old owner. I have resided in my property now for almost two years.
I had contacted the condo association and they turned it over to a lawyer. I contacted the lawyer and told them I can pay it off monthly and have been sending them an extra $100 a month on a $700 assessment, but it wasn’t good enough. Now, they plan to sue me.
I spoke to the management office and was told that if I pay half and make four payments they will stop charging me any late fee. The balance is almost $3,000. I am not behind on my mortgage. Can I lose my condo even when I’m trying to pay this off? And on top of that the monthly association payment went up two months ago — and again I was never informed. I need legal advice. –Kevin
DEAR KEVIN: I do not provide legal advice in this column, only general advice and hopefully helpful suggestions. Have you discussed the situation with your condominium board of directors? You should make that effort, and explain the entire situation. Perhaps they will be more realistic.
Otherwise, you should retain local counsel to assist you. However, I have a major concern. What efforts did you make to inquire why you were not getting any bills from the condo association? Clearly, you knew that you had to pay a monthly (or quarterly) condominium fee. Frankly, while I understand your concerns, I really don’t have any sympathy based on facts you gave me.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to email@example.com.
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