By:
Bryan Lui (Co-Managing Partner) [bryanlui@luibhullar.com]
Harneshpal Karamjit Singh (Co-Managing Partner) [harnesh@luibhullar.com]
When you walk past booths at real-estate expos promoting New Housing Projects, you’re likely to encounter brochures showcasing stunning model houses. These impressive visuals might entice you to visit the show unit, learn about other great features, and ultimately sign the Sale and Purchase Agreement (SPA). You then secure a loan and eagerly wait for the next three to four years to pass, anticipating the day you receive your keys.
However, what happens when the reality falls short of the promises?
The Disappointment of False Promises
This was the exact experience of two condominium buyers who found themselves victims of misleading marketing. Homebuyer A was particularly drawn to the hanging gardens advertised in the brochure and chose a unit on the floor where these gardens were supposed to be. However, the reality was far from the promise—what he got was a designated smoking area with random potted plants.
Homebuyers who have been in similar situations, whether it’s buying property or something as simple as shopping online, know the frustration of a bad bargain. The question is: Can you seek legal recourse?
Suing for misleading marketing and breach of contract :
Breach of the Sale and Purchase Agreement (SPA): The SPA between homebuyers, and the developer promised several features, such as four windows per unit and porcelain flooring. However, the units delivered had three windows, and the floors were tiled with cheaper homogenous tiles. The advertised hanging gardens turned out to be a mere smoking area. This breach of the agreement led them to sue the developer.
Misleading Marketing Materials: The brochure's depiction of the hanging gardens was a significant factor in homebuyer’s decision to purchase the unit. Under Section 18 of the Contracts Act, misrepresentation involves making an untrue statement that induces someone to enter into a contract. The legal action was taken on these grounds.
The Power of a Class-Action Suit
A class-action suit allows a group of people to collectively sue an individual or corporation. This approach spreads the cost of litigation among many plaintiffs, making it more affordable and substantial.
Developer’s Settlement Offer
In an attempt to settle the dispute out of court, the developer offered each resident RM 6,000 to withdraw their suit. Initially, this seemed like a reasonable offer. However, a building surveyor’s assessment revealed that the market value of the units had depreciated significantly. The homebuyer's condo, purchased for over RM 500,000, was now valued at less than RM 400,000. The settlement offer was thus deemed inadequate, and the residents decided to proceed with the lawsuit.
Conclusion: A Cautionary Tale for Homebuyers
This case highlights the importance of transparency and honesty in real estate marketing. Developers must be held accountable for the promises they make to potential buyers. For consumers, it underscores the need to thoroughly review all contractual documents and seek legal advice if necessary.
A class-action suit can be a powerful tool for addressing grievances, spreading the cost of litigation, and increasing the chances of a favorable outcome.
For guidance on developer misrepresentation issues, consulting a housing development lawyer can help homebuyers understand and protect their rights under the Housing Development Act.
Contact us for a free consultation via WhatsApp at +60143000960 or email at admin2@luibhullar.com for any questions
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