[Direct answer]Developers can be held accountable for false advertising in three ways: 1. Civilly, according to Article 3 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Disputes over Commercial Housing Sales Contracts (effective January 1, 2021), the developer's specific determinations about the houses and related facilities within the planning scope, as well as promotional commitments that have a significant impact on the purchaser's decision and the house price, are considered offers. Even if they are not included in the contract, they constitute part of the contract content. In case of breach of contract, the developer shall bear breach of contract liability. 2. Administratively, according to Article 28 of the Advertising Law of the People's Republic of China (effective September 1, 2015), reporting false advertisements to the market supervision department can result in a fine of not less than three times but not more than five times the advertising cost. If the promotion constitutes fraud, the purchaser can also claim to rescind the contract and request compensation for returning the house. The first step is to notarize the sales brochures, advertisements, and sales recordings. For more details, please refer to the following link:Legal services for real estate transactionsAndBeijing Henglue Law Firm.

I. Legal basis and interpretation of provisions

1. Article 3 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trials of Disputes over the Sale of Commercial Housing Contracts (effective from January 1, 2021)

The article defines the legal nature of promotional materials: sales advertisements and promotional materials for commercial housing are, in principle, invitations to make offers. However, if the seller's explanations and promises regarding the houses and related facilities within the scope of the commercial housing development plan are specifically determined and have a significant impact on the conclusion of the commercial housing sales contract and the determination of the house price, they shall be regarded as offers. Even if they are not included in the contract, they shall be deemed to be part of the contract content, and the seller shall bear breach of contract liability if they violate the provisions. There are three constitutive elements: specifically determined content, located within the scope of the development plan, and having a significant impact on the transaction or house price. The key points of evidence are the original fixation of brochures, advertising videos, sand table photos, and sales pitch recordings. The controversy focuses on whether the promotional content is "specifically determined".

2. Article 28 of the Advertising Law of the People's Republic of China (effective as of September 1, 2015)

The article defines false advertising as follows: if the information about the performance, function, quality, sales status, user reviews, or other promises related to the product do not match the actual situation and have a substantial impact on the purchasing behavior, or if the advertiser uses fabricated, forged, or unverifiable proof materials, or falsely claims the effects of the product, this constitutes false advertising. The administrative responsibilities are addressed in Article 55: the market supervision department shall order the advertiser to stop the dissemination of the advertisement and eliminate its adverse effects, and impose a fine of not less than three times but not more than five times the advertising expenses. If the expenses cannot be calculated, a fine of not less than 200,000 yuan but not more than 1 million yuan shall be imposed. If the circumstances are serious, the business license may be revoked. Article 56 clarifies that the advertiser shall bear civil liability to the consumers who have been harmed. Reports and claims for compensation can be pursued concurrently.

3. The interpretation of the case by the actual adjudicators

The court's grasp of the content of the advertisement shows a clear gradation: generalized phrases such as "high-end", "exquisite beauty", and "ideal residence" are difficult to be recognized; specific promises such as "starting school on X month, X year", "X% of the housing occupancy rate", and "X station of X Metro Line" are more likely to be recognized as offers. Promises about school districts and planning also need to be reviewed to see whether they are within the developer's control, and policy adjustments often become a defense argument. Administrative punishment decisions are highly effective evidence in civil cases, and many owners first obtain administrative recognition before filing a lawsuit for compensation. In terms of procedural time limits, the right of rescission is one year, and the statute of limitations for breach of contract compensation is three years (Articles 152 and 188 of the Civil Code), and the right to win the case will be lost if the time limit is exceeded.

II. Henglue Lawyer's Practical Experience

Based on Henglue's practical observations in handling similar cases, the key to winning or losing a false advertising dispute lies in the timing of evidence preservation: developers usually remove web ads and replace model units and showrooms before and after delivery. For owners who fail to preserve evidence at the time of signing the contract, it becomes increasingly difficult to provide proof. Therefore, if developers' promotions and promises may not be fulfilled, owners should immediately notarize or use trusted timestamps to fix the sales brochures, advertising videos, and sales recordings. In terms of dispute types, three high-incidence types include failed school district housing promises, reduced green space, and lowered parking ratio and decoration standards. Promises written into supplementary agreements are almost certain to be supported, while those that only exist at the promotional level must be individually evaluated based on the criteria of "specific determination + significant impact".

There are three pitfalls that parties are most likely to fall into: suing only the actual sales company and ignoring the developer as the main party, resulting in no property available for enforcement after the judgment; regarding administrative reports as the only means, with the result of the report not automatically leading to compensation; and refusing appraisal and identification, with the court significantly reducing the claimed price difference based on their own feelings. It is recommended to coordinate the clues of administrative penalties and evidence of collective rights protection with civil litigation, and the case path can be combined with itContract disputesLawsuits,\nEnforcement of compensationThe plan andSpecial servicesAfter careful consideration, we break down "accountability" into an actionable list of claims for compensation.

III. Frequently Asked Questions

Q1: Can I request a refund if the developer makes false claims in their promotional materials?

There are conditions. If the content of the promotion is specifically determined (such as the commitment to establish a branch of a prestigious school, the clear time of traffic opening, and the occupancy rate figures) and has a significant impact on the transaction, and the developer fails to fulfill the promise after making the offer, which constitutes a fundamental breach of contract, the buyer may request to rescind the contract, return the house, and get a refund; if it constitutes fraud, the buyer may claim to rescind the contract within one year from the date of knowing the grounds for rescission. For generalized hype such as "high-end" and "exquisite beauty", the court generally does not support the return of the house. A more feasible approach is to claim the loss of the price difference or breach of contract compensation. Whether the buyer can return the house in individual cases depends on the specificity and impact of the promotion.

Q2: What evidence should be collected for false advertising?

The materials include the sales brochure, floor plan manual, promotional leaflets, photos and videos of the sandbox and model rooms, billboards at the sales office, screenshots of advertisements on websites and public accounts, audio recordings of sales consultants' sales pitches and WeChat commitment records, purchase contracts and their attachments, as well as planning documents, school district division documents, and current situation photos that can prove the actual situation. It is important to fix the correspondence between the "commitment content" and the "actual delivery differences", and to notarize and preserve the evidence as soon as possible to prevent the developer from removing the advertisements and making it impossible to collect evidence. For key audio recordings, it is recommended to have the notary office handle them on-site, as their legal effect is higher than that of self-recorded ones.

Q3: Which department should I report false advertising to?

If false advertisements are reported to the market supervision department, the department may, in accordance with Article 55 of the Advertising Law, order the cessation of the publication and impose a fine of not less than three times but not more than five times the advertising expenses; if the sale of unqualified and false model rooms is reported to the housing and construction department; if the planning changes and the reduction of greening area are reported to the planning department. Reporting and civil litigation can proceed in parallel. The administrative punishment decision is a highly effective evidence to prove false propaganda in civil cases. Many owners rely on administrative identification to increase the success rate of claiming compensation. The reporting materials can be directly reused as the list of litigation evidence.

Q4: Can I request compensation for the difference in housing prices?

This can be claimed. If the unfulfilled promise results in the market value of the house being lower than the situation where the promise is fulfilled, the party can entrust an appraisal agency to conduct a price difference appraisal. The market value difference between the two states of "whether the promise exists" or "whether the promise does not exist" can be used as the basis for calculating the loss. The court will then determine the support ratio based on the specific degree of publicity and the causal relationship with the transaction. In addition to the price difference, direct losses such as the interest on the paid housing price can also be claimed. The appraisal process is the deciding factor in such cases. The timing of the appraisal application and the selection of the comparison object require professional control. The appraisal fee shall be borne by the losing party in proportion.

Q5: Is there a time limit for accountability?

Yes. The right to rescind the contract is valid for one year, starting from the date when the party knows or should have known about the grounds for rescission (such as discovering serious discrepancies with the advertisements when receiving the house). The statute of limitations for breach of contract compensation and return requests is three years. School district and planning fraud often come to light when children start school or the subway is put into operation. At this time, the party should immediately send a written letter to assert their rights to interrupt the statute of limitations and preserve the evidence of first learning about the false propaganda. If unsure about the starting point, it is best to consult a lawyer as soon as possible to assess whether the statute of limitations has already started. Delaying will not only waste time but also destroy evidence.

IV. Advice on Protecting Rights and Interests

  • Before signing the contract, incorporate the verbal promises into the contract: Key commitments such as school districts, subways, parking spaces, greening rates, and decoration standards should be included in the supplementary agreement and accompanied by breach of contract liabilities.
  • Notarize and preserve the promotional materials as soon as possible: standardize and fix the brochures, advertising videos, and sales pitch recordings to prevent developers from withdrawing them later.
  • Administrative and civil actions in parallel: Reporting to the market supervision and housing and construction departments to form administrative records, and preparing civil claims simultaneously. The evidence from both channels mutually support each other.
  • Joint action by affected owners: sharing evidence and sharing costs, which makes it easier to reach a negotiated settlement through collective rights protection.
  • Keep a close eye on the one-year revocation period and the three-year statute of limitations for litigation. If you assert your rights after the deadline, you will lose the right to win the case. If you discover any fraud, send a letter immediately to preserve evidence.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, to avoid missing the statutory time limit.Legal services for real estate transactions·Beijing Henglue Law Firm