Home sizes fall short, some area buyers say
Mistakes made in brochures, builder admits
By Andrew LePage -- Bee Staff Writer
Published 2:15 am PDT Sunday, September 11, 2005
Story appeared in Business section, Page D1

Home homeowners allege JTS Communities, one of Sacramento's largest
locally based builders, sold them houses that are as much as 168
square feet smaller than sales brochures indicated.

They say the missing space is the equivalent of a good-size bedroom
and demand compensation as well as punitive damages. Owners of about a
dozen of the homes have sued, while others are threatening to do so.

"They sold me something where I did not get the asset I paid for,"
asserts Folsom resident Rudy Troha, who bought a JTS model at issue
nearly five years ago and is now considering litigation. "Square
footage is an asset when you go to sell a home. Is it the only thing?
No. But it's a major thing."

JTS acknowledges discrepancies between the square footage listed on
its floor plans on file with local building departments and the size
indicated in at least some of the advertising for two floor plans.
These discrepancies of up to 168 square feet apply to fewer than 200
JTS homes sold in the Sacramento region between 1998 and late 2004,
the builder reports. That amounts to less than 6 percent of the
estimated 3,400 homes JTS says it sold here over that period.

JTS denies that it intentionally misled anyone, insists no one has
been harmed financially and stresses that all buyers signed sales
contracts stating square footage in marketing material was an
estimate.

"This is really much ado about nothing," contends JTS attorney Ian
Craig.

The state Department of Real Estate will investigate the home size
discrepancy as a result of at least one JTS homeowner complaint, said
agency spokesman Tom Pool, who said this type of complaint is rare.

The department has jurisdiction over licensed sales agents and will be
looking into whether any agent working for JTS knew that one floor
plan in particular, the La Jolla model, was "materially" smaller than
advertised.

Craig said JTS is cooperating with the department.

"We believe that once they receive the whole story, they will be
satisfied that there's no fault on the part of JTS," Craig said.

The builder says its original sales brochure listed the two-story La
Jolla model as 2,650 square feet (2,850 for an expanded version)
between late 2000 up until the brochure was changed last November.

That's when a La Jolla owner informed JTS that an appraiser's
measurement of her house came in below 2,650, Craig said. JTS then
found that floor plans on file with local building departments show
the base La Jolla model at 2,482 square feet, he said.

That measurement was the basis for the various building fees JTS paid
for about 160 La Jolla models built in eight JTS subdivisions in
Sacramento, Elk Grove, West Sacramento and Folsom. County assessor
records also are based on the size listed on filed floor plans.

Craig said when JTS learned of the discrepancy, it sent letters to
owners of the La Jolla model explaining the difference. It also
changed its sales brochures to show an estimated size of 2,500 square
feet instead of 2,650 for the base model.

JTS' Nov. 23 letter to La Jolla owners explained that sales brochures
"were based on plans that were submitted for approval to the Building
Department. As is customary, the Building Department required that the
plans be revised. The revisions preserved the design and layout of the
home but reduced the square footage."

Craig said there was a miscommunication between JTS employees who
handled the La Jolla building plans and the builder's marketing
department. The result was that the reduced square footage on the
revised floor plan was never reflected in the sales brochures, he
said.

"A mistake happened," Craig said.

He said JTS' normal practice is to base the estimated square footage
in its marketing material on the floor plan - the same practice other
local builders follow.

The home size dispute doesn't end with the La Jolla.

In March 2004 owners of eight Cypress models at The Waterfront in Elk
Grove filed a lawsuit against JTS in Sacramento Superior Court over a
roughly 150-square-foot discrepancy between the floor plan and a sales
brochure. The suit alleges fraud, breach of contract and false
advertising, among other things. It doesn't quantify the alleged
monetary damages.

Craig said some of the brochures for the Cypress homes - about 30 were
built at The Waterfront in the late 1990s - indicated the houses
measured 2,550 square feet, while another brochure stated 2,450 square
feet. He said the Cypress floor plan on file with the local building
department shows 2,401 square feet.

Craig said the discrepancy between some of the sales brochures and
floor plan stems from an expanded family room option, not chosen by
all buyers, that would have increased the square footage.

He said JTS has generally marketed the base Cypress model, sold across
the region, at 2,450 square feet. In instances outside The Waterfront
where sales material might have listed the Cypress at 2,550 square
feet, he said, the number probably included the optional expanded
family room.

Craig denies allegations by some disgruntled homeowners that the
builder has displayed a pattern of inflating home sizes in marketing
literature.

He insists there's been no attempt to mislead the public and that the
size disputes with the La Jolla and Cypress models apply to a tiny
fraction of the roughly 10,000 homes JTS has sold here since the early
1970s.

After JTS sent letters to 157 La Jolla owners last November, about 20
raised questions, Craig said.

In addition to the lawsuit filed by the Cypress owners, two more have
been filed in Sacramento Superior Court by owners of three La Jolla
models over the size dispute. It now appears the owners of some other
La Jolla homes are collectively considering litigation, and Folsom
owner Rudy Troha, 47, is in this group.

He said two appraisals of his La Jolla model for refinancing pegged
the size at 2,480 square feet. It's not obvious his home measures less
than 2,650 square feet, he said, but that's not the point.

"If you bought a car and they said it had a 300-horsepower motor, and
you found out it was really 220 horsepower, you may not readily notice
that difference, but I guarantee that when you found out there was a
difference, you'd go back to the dealer and demand satisfaction,"
Troha said.

JTS insists there's been no harm: "The value of our homes is based on
the design, features and unique quality of the home, including the
various options and upgrades you selected, and not solely upon square
footage," JTS told La Jolla model owners in its November letter.

Moreover, Craig said JTS has obtained copies of some appraisals of La
Jolla and Cypress models that indicate their size is close to, and in
some cases larger than, what was listed in the sales brochures.

He noted that the California Association of Realtors warns in an
attachment to its residential purchase contract for resale homes that
any square footage listed is an approximation.

"A prudent buyer should have (the house) measured if exact square
footage is important to them," said June Barlow, CAR's general
counsel.

Several veteran appraisers and architects in the Sacramento region
agreed there is no uniformly accepted standard to determine precise
square footage of a home and that often methods differ. There can be
variances depending on, for example, how stairwells on two-story homes
are factored, and whether balconies or turrets and columns are
included.

Veteran appraiser Nolan Lum, co-owner of Lum and Winn Appraisal Group
in Fair Oaks, said that he rarely sees a difference of more than 50 to
100 square feet between his own measurement of a typical tract home
and the size listed on a builder's floor plan or the county assessor's
record.

Lum said for homes in the 2,500-square-foot range, an additional 150
square feet might add about $7,500 in market value. He and others
stressed that many factors beyond square footage determine home value
and that occasionally homes with popular floor plans sell for more
than larger houses.

Brandon Gallardo, who owns a La Jolla model in Natomas, contends
there's a lot more at stake than $7,500. He said after reviewing
recent home sales he noticed a roughly $50,000 difference between what
a four-bedroom, two-bath home like his sells for depending on whether
it's in the 2,400-square-foot range or above 2,600.

Gallardo, a 30-year-old auto insurance claims adjuster, confirmed that
he wrote an Aug. 3 letter to JTS, threatening to sue the builder if it
didn't pay him $150,000 by Aug. 5.

JTS refused, and Gallardo said he's preparing to sue.

Gallardo said he arrived at the $150,000 figure by factoring in
punitive damages, how much he thinks he was overcharged for his home
in 2000 and how much less he believes it's now worth as a
2,482-square-foot home instead of a 2,650-square-foot home.

"It came down to purchasing this home because when we looked at the
price vs. the square footage we thought we were getting more home for
the dollar," he said.

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