In a 2020 LLR SCREC discipline action, the LLR SCREC stated:
Specific obligations of a real estate licensee, as well as the grounds for misconduct and
disciplinary action, are statutory.
A real estate licensee cannot rely on a disclaimer in an MLS
listing to be discharged from those statutory provisions.
Respondent committed
professional misconduct in significantly increasing the represented heated square footage
on the MLS from that initially populated from recorded county tax records, without proper
verification that the representation was accurate.
This LLR SCREC statement was in regard to a square footage disclaimer in the MLS.
…placed the following disclaimer: “Buyer to verify square footage, Seller states tax records incorrect.”
This LLR SCREC board order was on the typical dispute where the seller/MLS/listing states the square footage is "X" but the buyer asserts the true square footage is "X – Y" and the square footage is smaller than advertised/communicated/represented.
Some ways to risk manage square footage issues:
The seller/agent hires a licensed appraiser to measure the square footage and allows use of that number is advertising/communications/representations. The seller and real estate licensees check the work of the appraiser. Any advertising/communication/representation of the square footage references the source of the number (e.g., Appraiser John Smith SC license #1234567 measured the property on April 7, 2021 and states the square footage to be: __________________________).
Mass tax appraisal square footage information at the county is generally not precise. Mass tax appraisers work quickly on a high volume in a relatively short time frame. This can lead to human errors. Mass tax appraisers generally only measure the exterior of the property and do not enter the property.
Real estate agents who shoulder the risks to measure the property need to check and re-check their calculations based on their sketch and measurements. Have a colleague and BIC double check the calculations from the measuring sketch.
Educate buyers that square footage is not the ultimate determination for desirability or pricing. Location, quality, design, and functionality can also be factors.
Educate buyers that calculating square footage can be challenging and expect human errors or expert differing opinions in measuring properties that are not perfect single-story rectangles.
Recommend buyers who want exact square footage to measure themselves and to hire experts to measure the square footage.
Some listing brokers and sellers and MLS systems do not provide square footage as a risk management strategy. Similar strategies can include: using square footage ranges, or merely provide some room measurements. There are pro’s and con’s to this. Square footage is a useful tool in the evaluation of potentially suitable properties and searches.
Another risk management strategy is to post the MLS square footage post-closing, but this still allows disputes to occur. However, this allows appraisers to use MLS comparable sales with adjustments as well as real estate licensees to produce BPO’s and CMA’s.
SCR forms promote the buyer and buyer’s experts investigating square footage asap in the transaction even pre-offer or during due diligence.
Disclaimers can help educate buyers to timely investigate square footage and hire square footage experts to investigate square footage, but as this LLR SCREC order points out – disclaimers are not a perfect defense to square footage representation/advertising/communication complaints.
Posted by: Byron King on 4/7/21 (This information is only accurate as of 4/7/21. You must contact SCR for updates and changes to this information after 4/7/21 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org)