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Perspectives

Purchasers’ Claim for Fraud Dismissed as They Could Have Measured Size of Unit Themselves

The purchasers of a cooperative unit alleged that they were presented with a listing containing a floor plan which stated that the unit comprised “~1,966 square feet.” After purchasing, they allegedly discovered that the unit is only 1,495 square feet.  They sued the sponsor and the listing agent for breach of contract and express warranty, fraud, aiding and abetting fraud, negligent misrepresentation, and violations of the General Business Law.  The purchasers contended that the floor plan was incorporated by reference in the offering plan, and that the offering plan, in turn, was incorporated by reference in the purchase agreement.

A lower court dismissed the purchasers’ claims and an appellate court affirmed the dismissal. The purchase documents did not mention the listing, as required for the doctrine of incorporation by reference to apply.  The purchase agreement contained no statement or warranty as to the size of the unit.  To the contrary, the documents expressly stated that “[a]ll apartments … are being offered in ‘as is’ condition.  Accordingly, each apartment should be inspected prior to purchase to determine its actual dimensions, layout and physical condition.”  The purchasers could not have reasonably relied upon any representation as to the unit’s size because they had the opportunity to inspect and measure the unit themselves.  The claims under consumer-protection provisions of the General Business Law failed because the dispute was “unique to the parties to this transaction” and did not affect consumers at large.  Finally, only the Attorney General has authority to pursue a claim for misrepresentations purportedly incorporated in an offering plan.  Van Ancken v. 7 East 14 LLC, 2018 N.Y. App. Div. LEXIS 8029, 2018 N.Y. Slip Op. 8097 (1st Dep’t Nov. 27, 2018).