Chinese Millionaire Roils Brokers Over Shrinking Mansion

Aug. 20 (Bloomberg) -- Millionaire Hiroshi Horiike, who bought a four-bedroom, six-bath Tuscan-style mansion in Malibu, California, talks with Bloomberg's John Gittelsohn about his decision to sue Coldwell Banker and the seller's agent after discovering that his home had a third less living space than he'd been told. Both Horiike's broker and the seller's agent worked for Coldwell Banker. Horiike won an appeals court ruling that the seller's agent had a duty to protect his interests. Coldwell Banker, a unit of Realogy Holdings Corp., is asking the California Supreme Court to overturn the ruling. (Source: Bloomberg)

Millionaire Hiroshi Horiike spent two years searching California for a dream home, one grander than any he could find in his native China.

After visiting more than 80 properties in the Los Angeles area with an agent from Coldwell Banker, Horiike paid $12.25 million in cash for a four-bedroom, six-bath Tuscan-style mansion with a swimming pool, spa and guest house on 5.1 acres (2.1 hectares) overlooking the Pacific Ocean.

There was just one catch. After settling in, Horiike found the Malibu home had less living space than hed been told -- a third less. It had 9,434 square feet (876 square meters) instead of the 15,000 square feet shown in marketing brochures from the sellers agent, who also worked with Coldwell Banker.

Horiike, who also goes by his native Chinese name Peng Hong Ling after adopting a Japanese name as an adult, claimed he was cheated and sued the agent and the brokerage. He won a state appeals court ruling that sellers agents have a fiduciary duty to protect buyers interests, not just those of their clients, when theres only one brokerage involved in a deal.

If left standing, the decision could compel disclosure of confidential client information or force brokerages to drop out of transactions where they represent both buyers and sellers, threatening commissions on tens of thousands of deals.

Hiroshi Horiike at his Malibu, California, mansion with his three dogs: Shogun (the gray Weimaraner); Samurai (white Akita); Jiji (black lab). Horiike is suing Coldwell Banker because its agent marketed the house as 15,000 square feet, but it's only 10,000. Close

Hiroshi Horiike at his Malibu, California, mansion with his three dogs: Shogun (the... Read More

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Hiroshi Horiike at his Malibu, California, mansion with his three dogs: Shogun (the gray Weimaraner); Samurai (white Akita); Jiji (black lab). Horiike is suing Coldwell Banker because its agent marketed the house as 15,000 square feet, but it's only 10,000.

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Chinese Millionaire Roils Brokers Over Shrinking Mansion