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It seems that County Assessors under livable square footage use only legally permitted area. And Assessors use it to determine property taxes.

However, are there any laws in California that would require listing agents to advertise only the legal livable area as "livable area"? Or can listing agents also include space that is actually garage but is made to look like a bedroom under "livable area"?

In theory this misrepresentation could cause trouble for buyer because he may need to solve permit problem and also could be on hook for additional property taxes once county assessor discovers unpermitted area.

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