New construction home: what if the 'promise' in sales information doesn't materialize?

Everyone is familiar with the tension between the commercial promise and the final product. Very topical is the online discussion about the taste of Paradontax toothpaste. It has been changed and some loyal fans find it disappointing. It is raining complaints on the Internet about Paradontax's 'promise' that has been broken, according to the fans.

As strange as it may sound in today's overstrained housing market, new construction homes are also being touted. This is becoming increasingly innovative. Where it used to be about paper booklets with drawn-in 'artist impressions', for a number of years the website has been added, as well as increasingly the 'virtual reality tour of the house to be built'. Because a newly built home is a product that has yet to be made, the buyer is very dependent on the information provided for the image and the decision.

The reality after realization is still sometimes disappointing compared to the advertised image.

Social sector apartments instead of promised free sector apartments:

It is not often that a court of appeals rules on such a backlash. In a Nov. 3, 2020 ruling, the Hague Court of Appeals did. What was going on? Buyers buy a yet-to-be-built apartment with storage for €500,000.00 in 2011. The sales brochure and website extensively advertise the project. Among other things, it is stated that the project will consist of 82 free sector rental apartments and 19 owner-occupied apartments. After completion, it turns out that apartments in the complex will be rented in the social sector and not in the free sector. The buyers are disappointed in this. They believe that the owner of the rental apartments must still rent these apartments as free sector apartments or else pay damages to them. The court rejects these claims of the buyers.

What does the Court of Appeals think about this?

On appeal, the court of appeals re-examines the question of whether the buyers are entitled under the sales information and the sales agreement to the fact that no social sector housing is rented. The court specifically addresses the questions of how should the agreement and the meaning of the sales information be interpreted and what role do reservations play in that sales information? Importantly for the practice of real estate agents, developers and construction companies, the court makes a distinction between the sales information and the purchase agreement. The purchase agreement and the deed of delivery say nothing about the rental of homes in the project. According to the court, the communications in the sales information should be seen as general and recruiting and is intended to inform buyers and induce them to buy. That information must be carefully compiled because it concerns a property yet to be built, but is addressed to potential interested parties and therefore does not contain any agreements between the seller and the individual buyer. The latter are contained in the purchase agreement. As a rule, therefore, sales information gives no (long-term) guarantees to an individual buyer. Especially if the information as here is indicative and also contains broadly formulated reservations.

But despite this premise formulated by the court, the court does find that the sales information created certain expectations for the buyers. It follows that the seller does have to make an effort to rent the homes in the free sector. To this end, the court condemned the seller. On this point, the buyers were proven right.

The ethical issue of whether social sector rental housing relative to free sector rental housing harms the environment (which was also argued by the buyers) is not addressed in the ruling. It is purely about the value of the promise.

What to do.

Nobody, both buyer and seller is waiting for a disappointment. So how do you avoid disappointments like this ?

1. If information is still limited at the time of recruitment, emphasize that.
2. Make sure that the purchase agreement and what is described as a product in it and depicted on drawings is correct with what is made.
3. In a sales call, check what the buyers' expectations are and if they are not correct explain that.
4. Buyers do thorough research and ask questions about ambiguities and involve the answers in purchase decision and record them in a joint document.

( Hague Court of Appeal, November 3, 2020, ECLI:GHDHA:2020:2054)