Misleading Assurances by Builders: Legal Remedies for Homebuyers under RERA and Consumer Law

The Indian real estate sector, particularly in rapidly urbanising cities like Tier II cities, has witnessed exponential growth over the past decade in real estate sector. While this growth has expanded housing opportunities, it has also exposed homebuyers to widespread misleading assurances, false promises, and deceptive practices by builders and promoters. Buyers are often attracted through glossy brochures, exaggerated advertisements, and verbal commitments that are rarely honoured at the time of possession.

Misleading assurances not only cause significant financial losses but also lead to prolonged litigation, emotional distress, and erosion of trust in the real estate market. This article examines common forms of misleading assurances by builders, their legal implications, and the remedies available to homebuyers under RERA, consumer law, and allied legal frameworks.

What Are Misleading Assurances by Builders?

Misleading assurances refer to false representations, omissions, or half-truths deliberately made by a builder to influence a buyer’s decision. These may appear in:

  • Advertisements and marketing material
  • Brochures and prospectuses
  • Model apartments or sample flats
  • Verbal promises made during site visits
  • Builder-buyer agreements with one-sided clauses

Such assurances often relate to possession timelines, amenities, construction quality, carpet area, approvals, and legal compliance.

Common Misleading Practices Adopted by Builders

  1. False Advertising and Promotional Material

Builders frequently showcase luxury amenities, landscaped gardens, clubhouses, swimming pools, and premium finishes in advertisements. However, the delivered project often falls far short of what was promised.

  1. Misrepresentation of Possession Timelines

Buyers are promised possession within 2–3 years, but projects are delayed indefinitely due to poor planning, financial mismanagement, or diversion of funds. This ultimately lead to other fraud by the builder i.e. Delay in possession by the builder.

(https://solutiontobuilderfrauds.com/delay-possession/)

  1. Misleading Brochures

Brochures often depict amenities or services that are never constructed or are significantly altered. Even possession dates printed in brochures are later dishonoured.

  1. Manipulation of Carpet Area

Some developers inflate the size of units by including balconies, walls, or common areas, resulting in buyers receiving significantly smaller apartments than promised.

  1. Hidden and Arbitrary Charges

Attractive base prices are later inflated through undisclosed costs such as parking charges, club membership fees, maintenance deposits, and infrastructure charges.

  1. Poor Construction Quality

Promises of premium construction are often cosmetic. Substandard materials lead to leakage, structural defects, and high maintenance expenses.

  1. Unauthorized Construction and Deviations

Construction without approvals or deviations from sanctioned plans often results in legal disputes, penalties, or demolition notices, putting buyers at risk.

  1. Non-Registration or Incorrect Registration under RERA

Despite mandatory RERA registration, some builders fail to register projects or upload incorrect information to mislead buyers.

  1. Multiple Bookings and Overselling

In extreme cases, the same unit is sold to multiple buyers, leading to prolonged litigation and criminal complaints.

  1. Project Abandonment

Builders sometimes abandon projects midway, leaving buyers without possession despite having paid substantial amounts.

  1. Failure to Hand Over Common Areas and Amenities

Under RERA, common areas and amenities include staircases, lifts, lobbies, parks, open parking, clubhouses, gyms, swimming pools, and essential services. Sections 11(4)(e) and 17 mandate builders to:

  • Facilitate formation of the association of allottees
  • Transfer common areas and amenities within prescribed timelines after obtaining the Occupancy Certificate

Failure to do so results in penalties, extended liability, and compensation claims.

Why Misleading Assurances Are a Serious Issue

For most middle-class families, buying a home is a lifetime investment. Misleading assurances not only disrupt financial planning but also cause emotional trauma and legal uncertainty. In high-growth states —particularly in Tier II cities rapid urban development and weak enforcement mechanisms have made buyers especially vulnerable.
 
Legal Framework Protecting Homebuyers
Real Estate (Regulation and Development) Act, 2016 (RERA)
RERA was enacted to bring transparency and accountability to the real estate sector. Key provisions include:
•Section 12: Buyers are entitled to compensation if they suffer loss due to false advertisements, misleading brochures, or incorrect promises. Buyers may withdraw from the project and claim refund with interest.
•Section 14: Builders must adhere strictly to sanctioned plans and promised specifications.
•Section 17: Mandatory transfer of common areas, amenities, and documents to the association of allottees.
•Section 18: Refund and interest for delayed possession or failure to deliver as promised.
•Section 31: Buyers can file complaints with the RERA Authority.
 
Consumer Protection Act, 2019
Misleading advertisements and unfair trade practices can be challenged before consumer commissions, allowing claims for compensation and damages.

Remedies Available to Homebuyers

RERA /Consumer Court may order refunds, interest, compensation, penalties, or even revocation of project registration.
 
Section 31 – Filing Complaint before RERA Authority
Buyers can directly approach the RERA Authority or Adjudicating Officer for:
•Delay in possession
•Refunds and interest
•Compensation
•Breach of statutory obligations
 
Sections 71 & 72 – Determination of Compensation
While determining compensation, authorities consider:
•Loss suffered by the buyer
•Unfair advantage gained by the builder
•Repetitive nature of default
•Conduct of the promoter
 
Section 79 – Bar on Civil Courts (But Not Consumer Forums)
Civil courts are barred, but consumer forums retain jurisdiction.
 
2. Consumer Protection Act, 2019
Delay in possession amounts to “deficiency in service”.
 
Buyers may approach:
•District Commission – up to ₹1 crore
•State Commission – ₹1 crore to ₹10 crore
•National Commission (NCDRC) – above ₹10 crore

Conclusion

Misleading assurances by builders undermine buyer confidence and destabilise the real estate ecosystem. While deceptive practices remain widespread, legal awareness, timely action, and collective buyer effort can significantly reduce the risk of exploitation.

RERA, consumer law, and judicial precedents now offer robust protection to homebuyers. By understanding their rights and acting decisively, buyers can ensure accountability and safeguard their most valuable investment—their home.