You know it, beautiful pictures of expensive cars and nice atmospheric images in sales brochures. Everything is done to win over future buyers. Especially now that the demand for homes seems to be declining due to rising interest rates, real estate agents, developers and contractors will again pull out all the stops to sell homes. This is of course a logical consequence of the current market, but be careful with texts and images in sales brochures. Marloes Beeren explains why.
In a ruling by the Council of Arbitration in Construction Disputes dated Aug. 19, 2022, it has become clear once again that texts and images in sales brochures can create expectations in future residents that a contractor can be held to.
What was it about?
A sales brochure for the construction of an apartment complex stated that the apartments to be built would have energy label A+++ (A 'triple plus'). It also included a picture of this label. After completion, it turned out that the apartments had energy label A+. One of the residents went to the Council of Arbitration and demanded that the apartment be modified so that it would still obtain energy label A+++.
Technical Description
The construction company disagreed and argued, among other things, that it was not bound by the sales brochure because this brochure was not a contract document. The Technical Description was a contract document to the building contract and it did not state that the apartment to be built would have energy label A+++.
Disclaimer in sales brochure
The construction company also claimed that it had not prepared the sales brochure and only saw it for the first time during the arbitration proceedings. The construction company also pointed to a disclaimer in the sales brochure in the proceedings:
"All illustrations and floor plans are suggestive and represent only an impression of your future home, apartment and its amenities. Real colors and finishes may also vary. No rights can be derived from this brochure. The sale of the homes is at all times based on the building permit, technical description and sales drawings.".
What does the arbitrator think about this?
The construction company drew the short straw. Indeed, the arbitrator ruled that the contractor was bound to deliver an apartment with energy label A+++.
Clear wording in sales brochure
According to the arbitrator, the residents could expect to receive an apartment with energy label A+++ because of the clear wording in the sales brochure combined with the picture of this energy label. According to the arbitrator, a disclaimer in the sales brochure does not give the contractor a license to misrepresent, especially when it comes to such a specific point as the mention of the energy label.
Actively inform
The construction company's argument that the brochure was not prepared by the construction company and was only seen by the contractor for the first time during the proceedings could not help the builder either. Arbitrator ruled that a contractor can be expected to actively inquire with a broker or developer as to what information was provided. That the builder apparently did not do so in this case is within his own sphere of risk.
Compensation
Arbitrator did accommodate the construction company by ruling that still realizing an apartment with energy label A+++ went too far because of the extensive and costly repair work required to do so. The arbitrator therefore ruled that the residents should be compensated for the decrease in value of the home, also taking into account the current high energy prices. The arbitrator ordered the construction company to pay a sum of €30,000 as compensation for delivering an apartment with energy label A+ instead of A+++.
Promise makes debt
Flashy sales brochures, 3D models on websites or a virtual reality tour of the new home are great tools to enthuse interested buyers, but promise is debt. In principle, what is offered in the sales tools must also be realized.
For all of these sales tools:
- agree in advance with all involved what information will be shared with interested buyers
- Ask someone else to read sales information against to examine what expectations are created by the sales information
- Check with prospective residents what expectations they have and if they are not correct, explain the situation
- Ensure shared information is implemented in sales tools
