The Telangana Real Estate Regulatory Authority (TG RERA) has come to the aid of a homebuyer who alleged that a developer had misrepresented the saleable area of a villa and subsequently offered a substantially smaller built-up area.
In a significant ruling, TG RERA directed the promoter of the “Bentley Woods” villa project to refund ₹20 lakh paid by the buyer and imposed a hefty ₹98 lakh penalty on the developer.
The Authority found that the villa had been marketed and represented as having a total saleable area of 5,068.96 sq. ft., while the sale agreement proposed an area of only about 3,900 sq. ft. The remaining 1,169.76 sq. ft. was subsequently described as open space.
TG RERA treated the discrepancy as a material misrepresentation and held that a promoter cannot change the character of the area represented to a buyer after accepting money.
What was the dispute over the Bentley Woods villa?
The case was filed by P. Krishna Reddy, a homebuyer from Old Bowenpally, Hyderabad, against the promoter of the Bentley Woods project in Quthbullapur Mandal, Medchal–Malkajgiri district.
The project, spread over approximately 2.7 acres, comprises 44 villas.
Reddy said he came across advertisements for the project through Facebook, Google and physical banners in areas including Bowenpally and Kompally.
On October 12, 2024, he paid a ₹20 lakh token advance for a villa.
According to the documents relied upon by the buyer, the villa was represented as having a built-up/total saleable area of 5,068.96 sq. ft., with the overall property price being represented at around ₹3.6 crore/₹3.8 crore in the materials placed before the Authority.
The problem emerged when the parties proceeded towards executing the Agreement of Sale.
The buyer found that the agreement referred to only 3,900 sq. ft. of villa area. The remaining 1,169.76 sq. ft. was described as “open space” forming part of the project.
Buyer alleged nearly 30% area discrepancy
The buyer argued that he had been induced to book the villa based on its advertised and represented area.
However, when the sale agreement was being prepared, the area attributed to the villa was substantially reduced.
The difference worked out to approximately 1,169.76 sq. ft., or nearly 30% of the represented area.
Reddy alleged that this effectively resulted in an overcharge of approximately ₹90 lakh, because the price had been understood in the context of the substantially larger area represented by the developer.
He also contended that he had not been informed earlier that a substantial portion of the advertised saleable area would subsequently be treated as open space.
Builder denied that price was based on area
The promoter disputed the allegations.
It contended that the transaction was not based on a per-square-foot rate and that the overall price was not determined by multiplying a particular area by a specified rate.
The developer further argued that the area mentioned in the Agreement of Sale was indicative and approximate and was primarily relevant to the building plans and municipal requirements.
According to the builder, the buyer was aware of the villa’s design, size and other features and had accepted the agreed price.
The promoter also argued that there had been no agreement to revise the price based on the difference in area.
The developer’s representative maintained that the so-called open area related to the setback portion of the individual plot.
TG RERA found a material misrepresentation
TG RERA, however, did not accept the promoter’s explanation.
The Authority examined the marketing material, online advertisements, price details and Agreement of Sale and found a significant inconsistency between the way the property had been represented to the buyer and the area subsequently offered.
The Authority held that a promoter cannot first represent a property as a villa having a particular saleable area and later substantially reduce the villa area by characterising the balance as open or common space.
According to the findings, the difference between 5,068.96 sq. ft. and approximately 3,900 sq. ft. was not a minor variation but a material change affecting a key feature of the property.
Section 12 of RERA protects buyers against false representations
The ruling is significant in the context of Section 12 of the Real Estate (Regulation and Development) Act, 2016.
The provision deals with the promoter’s responsibility for the veracity of advertisements and prospectuses.
Where a buyer relies upon representations made by a promoter and subsequently finds that the property offered does not correspond with those representations, the promoter can face consequences under RERA.
In this case, TG RERA found that the discrepancy in the area was sufficiently material to give the buyer the right to withdraw from the transaction and seek a refund.
Open space cannot be introduced later to explain away the discrepancy
One of the important aspects of the ruling concerns the manner in which the promoter treated the disputed 1,169.76 sq. ft.
The Authority observed that while the law may permit the inclusion of a proportionate share of common areas in the overall saleable area, such details must be clearly disclosed to the allottee.
They must also be properly reflected in the Agreement of Sale.
A promoter cannot, according to the findings in this case, represent the entire area as saleable and subsequently classify a substantial portion as open space when the agreement is being executed.
TG RERA also questioned the project’s registration structure
The dispute went beyond the area discrepancy.
TG RERA also examined the project’s RERA registration status.
The promoter had obtained RERA registration only after questions were raised by the Authority. The development was presented for registration as a collection of individual plots.
However, TG RERA noted that the promoter’s own marketing material and advertisements repeatedly described the properties as “villas”, rather than merely plots.
The project comprised 44 villas with common infrastructure, according to the material considered by the Authority.
Artificial division of villa project rejected
The promoter’s position that the individual units could be treated separately so that the project would not require registration as a larger villa development was not accepted by TG RERA.
The Authority found a contradiction between the manner in which the development was marketed to buyers and the manner in which it was presented for RERA registration.
According to the findings, the development appeared to have been artificially divided into individual plots, each measuring less than the threshold applicable for registration exemptions, even though the properties were being marketed and sold as villas forming part of a common development.
TG RERA considered such an arrangement to be contrary to the regulatory framework and held the promoter liable for violating the provisions relating to mandatory project registration.
Builder’s claim that only ₹5 lakh was received rejected
The amount paid by the buyer was also disputed.
The promoter claimed that it had received only ₹5 lakh, while Reddy maintained that he had paid ₹20 lakh, including ₹15 lakh in cash and ₹5 lakh through NEFT.
TG RERA relied upon the Agreement of Sale dated October 12, 2024, which recorded the ₹20 lakh token advance.
The Authority found that the promoter was unable to produce sufficient documentary evidence to support its claim that ₹15 lakh was merely a notional amount or had not actually been received.
Consequently, the Authority accepted the buyer’s claim regarding the ₹20 lakh payment.
Buyer entitled to exit the project and obtain refund
After discovering the discrepancy and considering the project’s regulatory position, Reddy decided not to proceed with the purchase.
TG RERA held that the buyer was entitled to withdraw from the transaction because of the material misrepresentation concerning the property’s area.
The promoter was accordingly directed to refund the entire ₹20 lakh paid by Reddy.
₹98 lakh penalty imposed on promoter
TG RERA also imposed a substantial penalty of ₹98,03,458 on the promoter.
The penalty was ordered to be deposited into the TG RERA Fund.
The penalty took into account the Authority’s findings concerning the alleged misrepresentation of the villa’s area, non-compliance with RERA registration requirements and deficiencies in disclosures.
The order sends a strong message to promoters that the information used to market a real estate project must correspond with the actual property being offered to purchasers.
What this TG RERA ruling means for homebuyers
The decision provides several important takeaways for prospective buyers of villas and plotted developments:
1. Advertisements matter: Promoters can be held accountable for representations made through brochures, websites, social media and other promotional material.
2. Area must be clearly disclosed: Buyers should carefully compare the advertised area, price list, sanctioned plans and Agreement of Sale.
3. Open space cannot be concealed: If any portion of the advertised saleable area represents common area, open space or setback, this should be transparently disclosed before the buyer commits money.
4. Verify RERA registration: Buyers should independently check whether the entire development is appropriately registered with the relevant RERA authority.
5. Preserve promotional material: Homebuyers should retain brochures, advertisements, WhatsApp messages, emails, payment receipts and booking forms, as these can become important evidence in a dispute.
6. Do not rely only on verbal assurances: Material promises concerning area, amenities, specifications and possession should be incorporated into the Agreement for Sale.
A significant warning for villa developers
The TG RERA ruling highlights the importance of consistency between marketing representations, project approvals, RERA registration and contractual documents.
A developer cannot necessarily avoid regulatory obligations by changing the description of the property at a later stage.
Where a project is marketed as a collection of villas with common infrastructure, the regulatory authority may examine the substance of the development rather than merely its formal structure.
For homebuyers, the ruling reinforces a basic principle: what is advertised and promised must match what is legally offered and documented.
