For some, the American Dream involves buying a home. For others, the American Dream involves buying the largest, most luxurious mansion in Malibu. Enter Hong-Kong-based millionaire Hiroshi Horiike. In 2007, after seeing more than 80 inferior properties, Horiike threw down $ 12.25 million in cash for a mansion that he says was presented as 15,000 square feet and Malibu’s largest, reports the New York Times. Horiike didn’t bother to have the house checked by an independent party to verify that number, and was presumably enjoying his new place until he found out, much to his horror, that it was just under 10,000 square feet.
Horiike claims he was duped by a double-team of his real estate agent and the agent representing the seller—agent-to-the-stars Chris Cortazzo—who both worked for Coldwell Banker Real Estate at the time and had acted as “dual agents,” meaning they were supposed to be representing both buyer and seller. Cortazzo and Coldwell are both named in a lawsuit Horiike’s filed that seeks $ 5 million in damages.
The irony here is that if Horiike had not been so well-off, he probably wouldn’t have had to suffer through this terrible ordeal of having a smaller-than-he-thought house, because banks insist on sending appraisers before they lend money. That appraiser would have found the square-footage discrepancy before the sale was made. But because he bought the mansion in cash, Horiike didn’t have to worry about that. The NYT estimates that half the sales in Malibu and almost all of the $ 3-million-plus sales there occur in cash. That’s a lot of houses that could be several thousand square feet smaller than they purport to be.
Sadly, now Horrike is forced to live in an enormous oceanfront house of lies: “I don’t love my house,” he says. “It has become a bad dream. It has broken my heart and broke my dream about American people. Before, I thought everything here is beautiful. And perfect.” To recap: when he thought his house was 15,000 square feet, everything was cool and perfect. When he found out it wasn’t, his dreams were shattered.
It’s not uncommon that there are gaps between the square footage that a homeowner provides and those on record with the county assessor. High-end sellers want their houses to be as big as possible; one real estate lawyer told of a seller using the square-footage of a staircase to boost a house’s footprint. “At that point, you’re stuck in the middle between the assessor records and what the seller is telling you. All you can do is disclose that there is a discrepancy and that the buyer should measure the property himself,” an unidentified broker working in Malibu says. Illegal additions by mansion owners and the varying metrics that brokers and assessors use to measure buildings contribute to the likelihood that numbers are off. Still, almost all of the real estate lawyers and Malibu brokers who contributed to the article were “mystified how the Hong Kong businessman and his agent missed more than 5,000 square feet of property.”
Both sides have made strong arguments: this lawsuit was first won by Coldwell and Cortazzo in 2012, but Horiike’s team have successfully appealed, and now the issue is going to the California Supreme Court, which is expected to make a ruling this year. Worst case scenario for Coldwell: they lose, pay Horiike only $ 3 million, and he never counts it.
· In Malibu Luxury Home Listings, Thousands of Square Feet Often Go Missing [NYT]