ARTICLE

Misleading Advertising in Real Estate Sales

On February 11, 2010, Division II of the Federal Court of Appeals on Administrative and Contentious Matters confirmed in the “Nordelta SA c. DNCI – Disp. 690/08” case, a fine of $50,000 (fifty thousand pesos) imposed by the National Domestic Trade Bureau (“DNCI”) on Nordelta S.A. and ordered the latter to bear the court fees. The administrative sanction stems from the advertisement published in a national newspaper called “La Nacion” where the company offered apartments in Nordelta, a residential gated community, “From US$ 65,000 (dollars sixty five thousand)” without indicating the total price in cash and in local currency (pesos) to be paid by the consumer and without stating the company’s name and domicile in Argentina.
July 13, 2010
Misleading Advertising in Real Estate Sales

In DNCI’s opinion, the advertisement infringes section 8 of Resolution No. 7/2002, substituted by section 2 of Resolution No. 2/2005 of the Technical Coordination Secretariat of the Ministry of Economy, and section 9 of the Fair Trade Law No. 22,802. Section 8 of Resolution No. 7/2002 establishes that the voluntary publication of prices, including real estate prices, must be made in the local currency in force in Argentina (pesos) indicating the total price in cash to be paid by the consumer and stating the company’s name and domicile of the seller. On the other hand, section 9 of the Fair Trade Law forbids all kind of product presentations or advertisements that by means of hiding information or giving inaccurate information may provoke or cause confusion, or mislead consumers as to the price, among other characteristics, of goods, properties or services.

Division II of the Federal Court of Appeals on Administrative and Contentious Matters said that the publication of prices beginning with the preposition “From” prevents the consumer from definitely knowing the actual price of the goods, property or services advertised, and thus it constitutes a misleading advertisement. Moreover, the Court of Appeals reiterated the principle that the existence of an infringement to the Fair Trade Act did not require concrete damage to consumers. This case condemned two usual practices carried out in the real estate market: the use of foreign currency (usually United States dollars) in property prices and the advertisement of prices “From” a certain sum.

However, judicial precedents have ruled on these matters in different ways. Recently, Division III of the Federal Court of Appeals on Administrative and Contentious Matters said in re: “Ineter Developers SA c. DNCI – Disp. 666/08” (March 18, 2010) and in re: “Cris Morena Group SA c. DNCI – Disp. 737/08" (March 26, 2010) that advertisement of prices including the preposition “From” did not constitute misleading advertising. Regarding the publication of prices, Division V of the Federal Court of Appeals on Administrative and Contentious Matters argue in the “Achaval Cornejo y Cia c. DNCI 11/09” case that the obligation to publish prices in local currency in force in Argentina (pesos) is not applicable to real estate operations.