Assessors records are not the only source of confirming square footage by all parties because they can be incorrect. The appraiser should have come up with his own square footage and it should have been apparent that there was a garage conversion and he should have asked for a permit to confirm legal living space before he would add it to square footage. Your home inspection should have addressed this as well. The assessors' office does not approve the upgrade the building dept of Carlsbad does by issuing a building permit, have you checked with them? A notice of completion(file with the recorders office) usually triggers the reassesment. It is typically filed by the contractor or owner who does the conversion, have you looked at who filed this document? Do your disclosures show that the sellers converted this or did they purchase it as you did with the incorrect square footage? There are many questions that need to be answered before you can determine if you have recourse but more importantly with who. I have built and remodeled quite a few homes so I am very familiar with the paperwork and what dept. you would need to research with.I would be happy to review your file.