STOP! Before you sign that property deal, here are some must-know facts about the builder buyer agreements.This is your ultimate guide to builder buyer agreements by the end of this blog, you’ll know the clauses, cost, components, process and much more.
Buying a home is also an emotional investment rather than being just a financial one, but we might get carried away in the joy of buying our dream flat and neglect the legal backbone of the entire transaction. BUILDER BUYER AGREEMENT is not just paperwork but rather it protects your rights as a buyer, helps prevent future disputes and outlines builder’s obligations.
A Builder Buyer Agreement is a legally binding contract that is signed between the property builder and homebuyer at the time of property booking. It clearly outlines the terms and conditions of property sale like construction specifications, total cost, payment schedule, possession date, cancellation/refund terms etc. This agreement is governed under RERA i.e. Real estate regulation and development act, 2016.
Table of Content
1.Importance of legal agreements in property deals
2.What is the Buyer-Builder agreement
3.Major components of buyer builder agreement
4.When is the Builder buyer agreement signed?
5.What actually are the obligations of the builder and rights of the buyer that we keep talking about?
6.Common mistakes buyers shoulder avoid while entering the builder buyer agreement
7.Here’s how to Verify the agreement while safeguarding your interest.
8.How to deal with the breach of an agreement?
9.Conclusion
10.FAQs
Importance of legal agreements in property deals
A legal agreement ensures clarity, protection and accountability in a property transaction. It defines roles, terms and conditions and responsibilities of both the parties. Helps in avoiding future disputes by ensuring compliance with laws, without this, both buyers and sellers are exposed to malpractices, frauds, risks and misunderstandings.
What is the Buyer- Builder Agreement?
Buyer- Builder Agreement refers to a legal contract between the builder and buyer while booking a property. It outlines the property details like payment plan, possession date, builder’s obligation, buyer’s responsibilities. Also protecting both the parties is its duty. Under RERA which mandates transparency and timely possession.
Major components of Buyer Builder Agreement
- Project details: Provides the name, location and RERA registration details
- Details of the flat: specifies the allotted unit number, carpet area, all of the amenities included
- Total price: Provides a detailed and structured breakdown of the base price, included taxes and additional charges if any
- Payment plan: Explains how and when the payments will be made
- Possession timeline: States the expected date of possession along with the grace period.
- Terms of Cancellation: Provides conditions and structure for cancellation and refund
- Construction Quality: Specifies the material to be used along with the fittings and finishes that needs to be done.
- Default Clause: Specifies the penalties if one of the parties fail to meet the obligations .
When is the Builder buyer agreement signed?
The Builder Buyer Agreement is legally signed after the booking of the property but before demand of any significant payment beyond 10% of the property cost.
- PRE- booking stage: Mutual expression of interest from both the parties, discussion takes place informally and brochure is shared. No legal agreement is signed yet.
- POST-booking stage: Booking amount is paid upto 10% and the rest of the payment takes place after the builder buyer agreement is signed.
- RERA’s role:
- Makes the agreement legally binding
- Ensures builders cannot demand more than 10% of the property rate
- Before the agreement is signed.
- Agreement must contain key project details.
What actually are the obligations of the builder and rights of the buyer that we keep talking about?
Rights of the buyer
- Timely possession
- In case of delay, refund along with interest payment
- Information on the status of the project
- Defect liability upto 5 years
- No changes can be made without their consent
Obligations of the Builder
- Register the project under RERA
- Deliver what was promised
- Adhere to the timeline
- Fix defects
- Main transparency in communication
Common mistakes buyers shoulder avoid while entering the builder buyer agreement
- Sgning the agreement without consulting a lawyer.
- Ignoring delay in possession and hidden extra charges
- Not verifying RERA registration
- Overlook legal documents of builder
- Unclear grace period and possession dates
- Poor cancellation and refund clauses
- No clear mention of actual usable area/ carpet area
Here’s how to Verify the Buyer-Builder agreement while safeguarding your interest.
You can verify and safeguard your interest by checking RERA and project approvals, research about the builder’s past projects and also by comparing and matching the brochure details with the agreement. There are a few must have clauses that one should have which includes possession date, penalty for delay in the project, total cost’s breakdown without any hidden charges and lastly cancellation and defect liability terms. ALWAYS get the agreement reviewed by a lawyer before signing it.
How to deal with the breach of a Buyer Builder agreement?
Here are few LEGAL REMEDIES for breach of an agreement:
- File a complaint with RERA- In case the builder delays the possession, violates any terms or misinterprets the facts, you can file a complaint against the Real Estate Regulatory Authority which ensures transparency and timely delivery of the project.
- Approach the Consumer court- in case of deficiency of service such as poor construction quality and false promises you can go to the consumer court which deals with grievances related to unfair trade practices
- Seek compensation or refund- Buyers can demand compensation for loss or mental harassment and seek a full refund (with interest in most of the cases) in case the project has been unjustifiably been delayed or terminated.
Conclusion
Entering the buyer builder agreement has a significant impact on your journey towards your dream house, it lays a foundation for clarity, specified timeline and mutual responsibility. Stay informed, Stay vigilant to avoid pitfalls and have a smoother path towards your safe place.
FAQs
- Is RERA approval of the Buyer-Builder agreement mandatory?
Ans. Yes, under the RERA act, all the agreements must follow its format as well as the content for registration purposes.
- Can I make changes in the agreement?
Ans. You can request the changes before signing the agreement but once it is signed, both the parties must mutually agree to make the amendment.
- Can I cancel the agreement later?
Ans. Yes but the cancellation charges will be applied as per the terms of agreement. In case of a major breach by the builder, you can claim a refund.
- What documents should accompany the agreement?
Ans.
- Project Brochure
- Allotment letter
- Receipt of payments made
- RERA registration certificate
- Approved building plan
