The High Court has ruled on the value to be given to the promotional brochures when buying an off-plan real estate property.
The High Court states that these brochures shall be considered as an actual contract offer, and that they should help to interpret and integrate the contract according to the consumers regulation and the regulation on good faith in contracts.
The lawsuit refers a case involving a huge number of people who purchased a house based on planes and brochures that led them to acquire the property as they included references to golf courses, mountain and sea views which finally did not correspond with reality.
The purchasers brought an action seeking to terminate the contract and be refunded with the amounts already paid.
Whereas the Judgments issued by the Court of First instance dismissed the lawsuit as it was considered that there is not breach of contract in place, the Regional Court admitted the appeal and ruled that the contract shall be considered terminated condemning the Developer to refund the amount paid plus interest and court costs.
The Regional Court concluded that there was a breach of contract because they offered views which actually did not exist in the property, taking into consideration that the brochures included that the views were possible as consequence of the topography and characteristics of the project as well as it was possible thanks to the slope existing, which does not appear in the off-plan of the property annexed to the Agreement.
The developer appealed that decision by means of extraordinary procedural infringements, namely, Section 218 of the Act on Civil Proceedings (hereinafter LEC, as per its Spanish Acronyms) and also appealed based on violation of Section 1124 and 1256 of the Spanish Civil Code. The first one was not admitted, ruling the High Court on the second one as it is set hereinbelow.
It highlights the scope of the brochure. They discussed if the brochures should be considered as a mere advertising promotion intended solely to attract the purchaser to enter a business, as it is supported by the defendant, otherwise, if those shall be considered as an actual contractual offer.
The High Court dismissed the action based on the actual offer and its impact on the formation of consent. It considers that given that the property was acquired off-plan, it was not possible for the purchasers to check the lack of faithfulness of the brochures.
The characteristics stated on the brochure had a decisive influence on the acquisition, the claim from purchasers responds to objective and reasonable circumstances, and the principle of good faith requires a reasonable behaviour according to the trust created in traffic which is not observed when offering a house which does not correspond with the actual properties.
The breach of contract is considered severe enough to state the termination of contract given that the lack of view frustrates the expectation of purchasers, and therefore, it is not enough to provide the purchasers with an economic compensation.
In general terms, there is a problem with the faithfulness of the offer and contrary to the principle of good faith which confirms the rejection of the appeal at the last court stage.