- Authored by Mr. Hitendra V.Hiremath (works as Legal Consultant with RERA Consultants LLP and has earlier worked as In-House Counsel at Shriram Properties Private Limited and thereafter has worked with an investment banking firm Capaegis at Bengaluru, Karnataka, India)
What is Advertisement?
Section. 2 (b) of The Real Estate (Regulation and Development) Act, 2016 (“Act”) defines advertisement, advertisement means any document described or issued as advertisement through any medium and includes any notice, circular or other documents or publicity in any form, informing persons about a real estate project, or offering for sale of a plot, building or apartment or inviting persons to purchase in any manner such plot, building or apartment or to make advances or deposits for such purposes;
So the definition has made it clear that advertisement includes any mediums i.e., online or print media, used in order to advertise by disclosing the details of the real estate project in order to sell the apartment, plot or building as the case may be.
When Promoters can advertise the Project?
As stipulated under Section. 3(1) of the Act, the promoters of the real estate project are prohibited to advertise, market and thereby book, sell or offer for sale or invite any persons to purchase plot, building or apartment in the project without registering it with the Real Estate Regulatory Authority.
Penalty and Punishment if Promoters advertise Project without registration?
If Promoters advertise, market, book, sell or offer for sale or invite any persons to purchase plot, building or apartment in the project without registering the project with jurisdictional Real Estate Regulatory Authority, then authority as per Section. 59(1) can impose penalty which may extend upto ten percent of the estimated cost of real estate project, failure to remit the penalty imposed then as per Section. 59(2) of the Act, the Promoter shall be imprisoned for a term which may extend upto three years or with fine which may extend up to a further ten percent of the estimated cost of the real estate project, or with both.
What Advertisement materials constitute?
Advertisement materials includes any materials describing the details of project which is marketed and advertised through the Short Message Service (SMS), e-mails, hoardings, prospectus, brochures, newspaper, leaflet, radio, television, social media platforms, websites and/or any other forms of media.
What should the Advertisement materials to include?
As stipulated under Section. 11(2) of Act, all advertisement materials must include the registration number of the project allotted by the Real Estate Regulatory Authority with website of such authority along with such other necessary information incidental thereto. If promoter fails to follow the guidelines as per Section. 11(2) and thereby contravenes, then the authority under Section.61 shall impose a penalty which may extend up to five percent of the estimated cost of the real estate project.
Apart from this the Advertisement materials must be clear and Promoter has to adhere to the following:
- Should not make false/misleading representation about the project.
- The contents must be near to actual.
- Testimonials shall be original and genuine.
- Specifications as mentioned under the marketing materials shall form part of Agreement for Sale to be executed with Allottee/s.
Obligations of Promoter in case of veracity of Advertisement?
As stipulated under Section.12 of the Act, if any person makes any advance on the basis of the information as per the advertisement or prospectus and sustains any loss or damage due to any false and incorrect information then he shall be compensated by the promoter of the real estate project.
The person, who is affected by such false advertisement, is entitled to withdraw from the project and his investment has to be returned with interest at such rate as may be with the compensation.
Who can hear the matters on veracity of advertisement?
The adjudicating officer appointed shall have the authority to hear the matter and decide the compensation based on the loss or damage sustained due to such false or incorrect information in the Advertisement. (Readers can read the article of the author on Ambit and Powers of Adjudicating Officer under the Act, Available at http://www.reraconsultants.in/2019/03/16/analyzing-the-ambit-and-powers-of-adjucating-officer-under-the-provisions-of-the-real-estate-regulation-and-development-act-2016-and-the-karnataka-real-estate-regulation-and-deve/ )
Cases were penalty imposed?
The Maharashtra Real Estate Regulatory Authority on April 5, 2018 imposed penalty of Rs.50,00,000/- (Rupees Fifty Lakh Only) under Section 61 of Act on Piramal Realty for not mentioning Maharashtra RERA website in an advertisement published in a national daily, the advertisement also carried the project’s registration number on the second page instead of the first in “very small” font size. The penalty was imposed for contravention of Section. 11(2) of Act and the order stated:
“…on the front page the promoter has not mentioned MahaRERA registration number at all. The registration number is mentioned on the 2nd page in a very small font/print. In the full page advertisement, the MahaRERA registration number is not accompanied by the website address of MahaRERA.” (Source: Money Control, MahaRERA imposes Rs. 50 lakh fine on Piramal Realty, April 6, 2018, Available at https://www.moneycontrol.com/news/business/real-estate/maharera-imposes-rs-50-lakh-fine-on-piramal-realty-2544155.html , last visited on March 23rd, 2019 at 02:25pm)
- This post underlines the information as per the applicable provisions of the Real Estate (Regulation and Development) Act, 2016; and
- We recommend the Promoters to seek the assistance of the Professionals involved in the real estate practice in case of any queries, clarifications with respect to advertisement of the real estate project.
For any other details, clarifications, assistance, advise and other services, please visit www.reraconsultants.in; or can get in touch with us at 080 – 2223 3003 or email to firstname.lastname@example.org