Daily Development for Wednesday, April 27, 2005 by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law UMKC School of Law Of Counsel: Blackwell Sanders Peper Martin Kansas City, Missouri dirt@umkc.edu

I've had this kind of case before, which I settled for an amount that disappointed my buyer client - but now appears to have been a wise decision. So I thought it would make an interesting DD.

BROKERS; MISREPRESENTATION; SIZE: Even where brokers advertise property based upon its comparative cost per square foot as compared to other homes in neighborhood, buyer has no claim for damages when property proves 650 square feet less if buyer cannot show that the fair market value of the property was in fact lower than the price buyer paid. 

Matheus v. Sesser, 2005 Westlaw No. 914473, No. 2-03-222-CV  (Tex.App. Dist.2 04/21/2005)

The advertisement listed the price per square foot of the house and emphasized that this was substantially below the per square foot price of other houses in the neighborhood.  The evidence showed that the buyer relied upon the "per square foot" analysis in making decisions about offering and counteroffering on the house.  And it was clear that the brokers had been negligent in computing the square footage.  Although their statement as to square footage included the statement that this was "per tax" - a common note that the broker is relying upon tax assessment roles - in fact the brokers had erroneously added together figures that in fact should not have been added, as they already were comprehensive.

Notwithstanding this evidence, the court found that there could be no recovery because there was no evidence that the buyer had suffered damages.  The bank's appraisal of the property - the only evidence offered of the fair market value of the property - indicated that the property was worth more than the buyer paid for it, even though not worth as much as the buyer probably anticipated.

The buyer argued strongly that he was entitled to a "benefit of the bargain" measure that would award him the difference between the actual size of the house and the represented size, based on the per square foot value that was urged.  This would have resulted in a $50,000 award.  The court responded that the standard methods of computing damages did not permit looking beyond the fair value evidence.  One precedent case otherwise was dismissed as dicta.

Comment:  It's quite possible that the buyer would have had a better chance seeking rescission.  Clearly the house was not "as advertised," and the buyer was entitled to rely on the specific representation.  But if the buyer accepted the house, then the buyer was held not to complain that the bargain was less rich than he anticipated.

Readers are encouraged to respond to or criticize this posting.

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