• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

False Advertising

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

sws26

Junior Member
California,

We recently put down a deposit on a house bought off-plan that is now under construction. When doing an initial frame walk it was immediately obvious that ground floor (3 story house) has 8' ceilings compared with the 9' ceilings we were led to believe would be included by the model house and condo plan.
The contract is with a large building firm and typically one sided, including mandatory arbitration and language that states that all dimensions in advertising materials could be wrong and there is no guarantee that any of the dimensions will match what you were promised.

We have contacted the seller who apologized for the error but pointed out the relevant contract clauses and said pretty much tough luck.

Do these contracts trump all consumer protection/false advertising laws?
 


single317dad

Senior Member
Just to clarify, you bought a house and the contract you signed not only did not specifically lay out measurements that were important to you, but went so far as to say in writing that you should not expect to receive what you paid for?

Just wanted to make sure that was indeed what you signed.

Did it say anywhere that payment may be reduced and the contractor should not expect to receive the amount of cash he was promised?
 

quincy

Senior Member
California,

We recently put down a deposit on a house bought off-plan that is now under construction. When doing an initial frame walk it was immediately obvious that ground floor (3 story house) has 8' ceilings compared with the 9' ceilings we were led to believe would be included by the model house and condo plan.
The contract is with a large building firm and typically one sided, including mandatory arbitration and language that states that all dimensions in advertising materials could be wrong and there is no guarantee that any of the dimensions will match what you were promised.

We have contacted the seller who apologized for the error but pointed out the relevant contract clauses and said pretty much tough luck.

Do these contracts trump all consumer protection/false advertising laws?
How was "bought off-plan" explained to you?
 

sws26

Junior Member
We were provided with mounds of sales documentation that had floor plans with dimensions. The only mention of the ceiling height was in a condo plan that had all heights at 9'.

The contract itself had a copy of the floor plan but did not specifically mention ceiling heights and has disclaimers about dimensions not necessarily being precise. They had a model home at a different community that they were using to demonstrate the interior (that community had 9' ceilings throughout). I believe they intended to have 9' ceilings on all floors but ran into a height restriction and had to chop a foot off the ground floor but neglected to tell the sales department.
 

sws26

Junior Member
This is a large construction firm with a good reputation and the contract (132 pages long) does include language that states the house will be built in substantial conformance with the approved plan. I'm not sure if this refers to the the condo plan (shows 9' ceilings) or the structural plans which we were never provided. We were shown a model that included a 9' ground floor and told the interior would be the same as what was being built. The contract specifically includes other details (like an 8' front door) that clearly indicates it was originally intended to be 9' but had to be changed at the last minute.
When we had a frame walk through we noticed the 8' ground floor immediately. We complained to the sales associate who apologized for the mistake but said they weren't willing to compensate us for it.
 

quincy

Senior Member
This is a large construction firm with a good reputation and the contract (132 pages long) does include language that states the house will be built in substantial conformance with the approved plan. I'm not sure if this refers to the the condo plan (shows 9' ceilings) or the structural plans which we were never provided. We were shown a model that included a 9' ground floor and told the interior would be the same as what was being built. The contract specifically includes other details (like an 8' front door) that clearly indicates it was originally intended to be 9' but had to be changed at the last minute.
When we had a frame walk through we noticed the 8' ground floor immediately. We complained to the sales associate who apologized for the mistake but said they weren't willing to compensate us for it.
"Substantial conformance," and "all dimensions in advertising materials could be wrong," and "no guarantee that any of the dimensions will match."

You signed a contract that essentially said you would purchase the house as constructed in exchange for the discount provided you by the builder if you purchased the house prior to construction. Again, I am not seeing any false advertising.

You took a risk, probably based on the location of the property and the reputation of the builder, and possibly it will wind up being a profitable risk for you. But you signed a contract that legally binds you to the purchase of the resulting house, unless there is something in the 132 pages that can release you from the contract.

You can have the 132 pages personally reviewed by an attorney in your area, if you are upset with the way the house is being constructed.
 

sws26

Junior Member
Perhaps false advertising is the wrong term, misrepresentation may be more accurate. But I am gathering the prevailing opinion is that they can't be held to account in any way for the claims of their sales representatives.
 

quincy

Senior Member
Perhaps false advertising is the wrong term, misrepresentation may be more accurate. But I am gathering the prevailing opinion is that they can't be held to account in any way for the claims of their sales representatives.
I don't think anyone said that.

But you are responsible for knowing what is in a contract before signing it. If you do not understand the terms or if you do not agree with the terms or if you believe that the written terms of the contract do not accurately reflect what was communicated to you orally in a sales presentation, you shouldn't sign - or at least you shouldn't sign before having the contract reviewed and explained to you by a professional.

I suggest now that you find an attorney in your area and go over with this attorney all that you were told by the sales representatives. Let the attorney know what you assumed from what you were told. And then have the lengthy contract you signed personally reviewed by the attorney. See what the attorney says and go from there.

Good luck.
 
Last edited:

quincy

Senior Member
Will do, thanks for the advice.
You're welcome, sws26. I am sorry that what I offered is probably not what you wanted to hear.

Off-plan buying has always been a risk for an investor because the investor places himself at the mercy of the builder. It is less of a risk when you know the builder and his reputation and the sales market in an area, but there is never a guarantee any house will sell quickly after purchase or that it can be rented out easily or that a profit can be made.

The length of the contract you had to sign would have given me pause, and terms of a contract that strongly favor the opposing party is not a contract I would have signed, regardless of the discount received in return. But then, I am not much of a risk-taker. :)

Good luck.
 
Last edited:

LdiJ

Senior Member
You're welcome, sws26. I am sorry that what I offered is probably not what you wanted to hear.

Off-plan buying has always been a risk for an investor because the investor places himself at the mercy of the builder. It is less of a risk when you know the builder and his reputation and the sales market in an area, but there is never a guarantee any house will sell quickly after purchase or that it can be rented out easily or that a profit can be made.

The length of the contract you had to sign would have given me pause, and terms of a contract that strongly favor the opposing party is not a contract I would have signed, regardless of the discount received in return. But then, I am not much of a risk-taker. :)

Good luck.
As the sister of a homebuilder I will tell you that normally those clauses in contracts are designed to avoid nit-picking. As an example, if the contract says that the great room is 18 x 20 ft, and the end result ends up being 17" 11 inches by 20 ft, its to avoid litigation over that one inch. Another example is if the ceiling is supposed to be 9 ft and it ends up being 8 ft 10 inches. Its more than a bit unusual for a reputable home builder to advertise 9 foot ceilings and build to 8 ft. However, if the ground floor is not actually the main floor, (ie a walkout type basement or something similar) it could be less unusual.

However, I think that the OP should be going up the food chain a bit to discuss this. This appears to be a reputable builder from what the OP is saying, and while even a reputable builder wouldn't care about nit-picking, I find it hard to believe that a reputable builder would want the kind of bad word of mouth advertising that would go along with 8 ft vs 9ft ceilings. Its probably not something that is correctable, but it might be something truly explainable, or something compensable.

Again though, its much more significant if the ground floor is the main floor.
 

quincy

Senior Member
... However, I think that the OP should be going up the food chain a bit to discuss this. This appears to be a reputable builder from what the OP is saying, and while even a reputable builder wouldn't care about nit-picking, I find it hard to believe that a reputable builder would want the kind of bad word of mouth advertising that would go along with 8 ft vs 9ft ceilings. Its probably not something that is correctable, but it might be something truly explainable, or something compensable.

Again though, its much more significant if the ground floor is the main floor.
I am not sure who is above the builder on the food chain in an investor-builder agreement. An off-plan purchase is an agreement between an investor and a builder to purchase a house pre-construction.

The investor is already being "compensated" by the builder by purchasing the house at a (generally significant) discount, with the general purpose for the investor being to sell it quickly at a post-construction price. This works for the builder, because he does not have an inventory of homes to unload post-construction. This can work for the investor, because he stands to make a profit on the sale once construction is complete.

I do not think any investor wants it known the type of discount he received on the house - and this discount could be revealed if the investor decides to do any "bad word of mouth advertising." Complaining about the builder also stands to hurt the investor's sale of the house. A purchaser is likely to work with both the house construction and the discount price information to get a better price on the house, potentially eliminating any profit the investor might otherwise realize.

That said, a review of all facts is never a bad idea and sws26 might want an attorney-review if he feels the house as constructed does not only not live up to the terms of the agreement but could make finding a new purchaser more difficult.
 

sws26

Junior Member
My impression of the dimension clauses when I signed the contract is that they were included to avoid nit picking. It is included in a laundry list of other minor details that may change slightly, like the exact position of light switches and electrical outlets etc. The ground floor has the entrance, garage and 1 en-suite bedroom. This is not an investment property, this is my first house I bought to live in and I didn't think I was getting a huge discount by buying off-plan.
 

quincy

Senior Member
My impression of the dimension clauses when I signed the contract is that they were included to avoid nit picking. It is included in a laundry list of other minor details that may change slightly, like the exact position of light switches and electrical outlets etc. The ground floor has the entrance, garage and 1 en-suite bedroom. This is not an investment property, this is my first house I bought to live in and I didn't think I was getting a huge discount by buying off-plan.
Have you had the opportunity to see an attorney in your area yet, sws26? You need a personal review of the contract you signed, and a review of what you were told prior to signing the contract, in order to determine if the lower ceiling height falls within the range of modifications allowed the builder under the terms of the contract.

Off-plan buying is not as common in the US as it is in some European countries, in large part because of difficulty with financing a home in advance of construction, and it is also not common for anyone other than an investor to purchase a house off-plan. There are too many risks for the average home buyer to want to commit to the purchase of a house pre-construction, where the construction is not done to a plan the purchaser controls.

In other words, and as said previously, the buyer is essentially at the mercy of the builder. It is, in many ways, a blind purchase based on trust in the builder and the desirability of the area where the house is being constructed.

Again, have your contract personally reviewed by an attorney in your area, if you are unhappy with the way the house you purchased is being constructed. The length of the contract indicates to me that the builder has covered every contingency possible so that the purchaser will not have an "easy out."

Good luck.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top