[Column] Of Ornate Properties & Rosy Advertisements

Promising advertisements on various mediums of communications showcasing ornate residences constructed by real estate developers to attract potential buyers is something one cannot turn a blind eye to. What one also cannot turn a blind eye to is that relying on those pictures and shelling a hefty sum to book a property can in no uncertain terms be perilous, leave alone being a trademark of poor decision making. Inevitably, one can make an informed choice only when one has had the opportunity to carry a fact finding exercise about a potential property, the real estate developer, its standing in the market and most importantly, whether it is registered with statutory authorities among several other considerable factors.

This brings to the moot question- if a potential buyer is constrained to undertake such an exercise despite assurances in adverts, what purpose do the latter serve except for offering self serving promises? Additionally, do these adverts then qualify as being ‘misleading’? It is time that we talk about the elephant in the room.

Apparently, it is these questions that the Haryana Real Estate Regulatory Authority, Gurugram (‘HRERA’) decided to answer while laying down the Haryana Real Estate Regulatory Authority, Gurugram directions to the builders/promoters with regard to advertisements of real estate projects (hereinafter referred to as ‘directions’). These directions, issued vide Notification dated 22.02.2021 sought to ‘provide necessary guidance to promoters of real estate projects and to media organizations and advertising industry intermediaries regarding appropriate nature of compliance for advertisement of Real Estate (Regulation and Development) Act, 2016 (‘2016 Act’) registered projects’.

Before appreciating the implementation of the aforesaid directions, certain provisions of the 2016 Act assume significance, especially in light of issuance of advertisements with respect to real estate projects.

Provision	What it stipulates
Section 2(b)	Defines the word ‘advertisement’ and covers advertisements issued across all mediums that, inter alia, inform persons about a real estate project, plot, building, etc.
Section 3	Provides that it is mandatory for a promoter to register a real estate project under the 2016 Act before it is advertised.
Section 11	Mandates that a promoter has to prominently mention the website of the Real Estate Regulatory Authority, wherein details of the real estate project can be accessed.
Section 12	Stipulates that the promoter is obligated to ensure veracity of the advertisement, failure whereof would result in payment of compensation by the promoter.

From a reading of the aforementioned provisions, it becomes clear as daylight that the 2016 Act does provide a holistic mechanism to cover the aspect of advertisement of real estate projects. Further, even provisions for penalty in case of noncompliance are provided in the 2016 Act. However, one ought to reason as to why the need to issue directions with respect to advertisements arose in the first place when there already existed specific provisions in that regard. Perhaps, the only plausible explanation for the same appears to be the need to make the provisions even more express and the directions even more lucid so that there remains no window for error, intentional or otherwise, by real estate developers.

Be that as it may, HRERA has notified a slew of directions that need to be followed by real estate developers while advertising their projects which involve clearly mentioning RERA registration numbers including on advertisements on billboards and hoardings and even while making audio announcements and mention of Real Estate Regulatory Authority’s website in the advertisement.

Interestingly, the notification also delineates the manner in which the promoter is to mention relevant details such as writing the same in bold letters and even supplying a copy of the prospectus/brochure/pamphlet to HARERA before it is circulated. The notification even provides for a specimen of advertisement that may be referred.

Not to mention that the notification includes a specific direction to the effect that the promoter is to ensure that the adverts are truthful and there is no exaggeration/misinterpretation of facts that may create a prejudicial impression in the mind of a potential buyer. The notification also stipulates that the onus of violation cannot be shifted to the advertising agency.

In fact, to my mind, the aforementioned responsibility is not only significant in respect of the provisions of the 2016 Act, such direction also appears to be in tandem with the tenets laid down by the The Advertising Standards Council of India (‘ASCI’) that among other commitments, ensures ‘truthfulness and honesty of representations and claims made through advertising and safeguarding against misleading advertising’. [1]

Indubitably, these directions come at a time when investors and potential buyers are overtly conscious of placing their money in the avenue of asset creation. The market sentiment is tilted towards minimal spending. Even in the worst case scenario, potential investors would find it hard to seek realization of their claims before a court of law for the sheer time and money involved.

As a matter of fact, these directions attempt to guarantee that what appears on an advert is what the actual position is and that a potential buyer or investor can rely on it without having to doubt its veracity. These directions, in essence, fix responsibility on real estate developers which is indispensable since the entire transaction involves someone shelling their savings to invest while some investing after managing heavy loans from financial institutions, all of which cannot be afforded to be lost for some deceptive promotions.

However, if there is one question that looms, it is as to how many of such investors and buyers are even aware that they can seek refuge of these directions. Further, how many of them are aware that specific provisions with respect to misleading advertisements exist in the 2016 Act.

For a welfare legislation to actually do welfare, it is paramount to make consumers conscious of these regulations. Understandably, since these directions have been issued by HRERA, Gurugram, the same are only limited to adverts within the jurisdiction of Gurugram. However, they surely serve as a guiding path for various other Real Estate Regulatory Authorities who must frame directions on similar lines depending on possible violations that developers under their jurisdiction are likely to make. In its absence, notifications and regulations would restrict themselves to weekly columns and topics for esoteric discussions without the benefit reaching the end user.

Real estate advertisements have had the better of gullible consumers for long time. It is time those ornate residences in pictures in newspapers and brochures actually turn out ornate for now the buyer would like the real estate developer to have its money where its mouth is.