It happens all the time in New York City. Someone buys an apartment relying, without further investigation, on statements made by a sales agent – and then learns, too late, that the statements were incorrect. According to a news report, it happened last year to a purchaser, who placed a $1 million down payment on a $10.5 million Chelsea condo after being told by the selling agent that the ceilings in the under-construction apartment would be “just shy of 10 feet tall” – high enough to accommodate her extensive art collection. However, when she later reviewed the offering plan and measured the finished apartment, she learned that the ceilings were not the anticipated height. She has had to sue to recover her down payment.
A similar case unfolded recently in the East Village, where a sales agent marketing a cooperative gave a floor plan to the purchasers showing that the unit was 1,966 square feet. The purchasers closed and paid the sponsor $2.1 million for the apartment – only to discover after moving in that, they claimed, the unit is actually 1,495 square feet. They sued both the broker and the sponsor, claiming that, by virtue of the floor plan, they had been given a warranty as to the size of the apartment, or, in the alternative, that the floor plan constituted fraud or negligent misrepresentation.
However, the offering plan stated: “Any floor plan or sketch shown to a prospective purchaser is only an approximation of the dimensions and layout of a typical apartment. The original layout of an apartment may have been altered. All apartments and terraces appurtenant thereto are being offered in their `as is’condition. Accordingly, each apartment should be inspected prior to purchase to determine its actual dimensions, layout and physical condition.” The purchase agreement also stated that no other representations were being made by the sponsor, and apartment was being sold “as is.”
The broker and the sponsor both moved to dismiss the complaint. The trial court granted their motions, and the appeals court affirmed. The sales agent and the sponsor were off the hook because of the disclaimers contained in the offering plan and the purchase agreement.
Apartment buyers should be aware that they should never rely on representations made by a selling agent unless those representations are expressly made or specifically incorporated into the purchase agreement or the offering plan. Offering plans and purchase agreements are replete with disclaimers intended to negate representations made outside of them. Purchasers often think that disclaimers are mere boilerplate, but, in fact they will be enforced by the courts. And, regardless of representations about an apartment’s dimensions, buyers should always get out their own measuring tape – and measure twice.