Can you claim against the developer or seek compensation for misleading advertising?
A real enquiry:
Some consumers have been sold HOMES by means of brochures (produced by the developers) showing the development built in 3 phases in a U shape. The brochures do not show a fourth phase that closes off the three phases of the U, leaving it practically without views and without the opening at the mouth of the U.
The settled view of both the higher and the lower courts is that brochures, promotional videos, web videos and the advertising images for each phase form part of the purchase contract.
Several recent court rulings have found in favour of consumers who discover that the features of the homes they bought are different from those offered and agreed at the time of purchase.
Claims sometimes begin with consumer protection organisations (for example, OCU), based on the existence of false, impossible or misleading advertising that played a significant role in the buyers’ decision-making.
These breaches (it has not been sold as the photo shows) are common in off-plan home purchases.
As the signed contracts and specifications are brief and vague, they are supplemented by brochures showing “what the homes will look like” once finished, reflected in a computer-generated image printed in a brochure. In this way, the advertising comes to play a significant role in the buyer’s decision-making process. But when they receive the property, the buyers in the first phases find that there is a fourth phase, at the foundations or construction stage, that will block their view (and it did NOT appear in the brochure they were given).
Brochures and all the advertising material used by developers are binding when claiming for breach of the terms on which the home was purchased.
The advertising brochure does not merely serve a promotional purpose; it constitutes a genuine binding offer.
If the photographs showed views of the mountains and the sea from the houses, these had a decisive influence on the purchase. And it is no good arguing that the views of the golf course, the mountains or the sea were included for the complex as a whole, but not for each phase or individual home.
In a court claim, compensation from the developers is one of the possible outcomes of this type of dispute when the claimant’s aim is to cancel the contract. This only happens when the buyer does not wish to take the flat purchased. The compensation may consist of the refund of the money paid by the buyer, plus interest, and may include a sum for damages, as well as the legal costs of the entire court proceedings.
Any questions?