Since the implementation of RERA, homebuyers and real estate developers are benefitted on par with the bringing up of transparency, affordability and faith in the real estate sector. Along with these, to overcome other multiple issues in the real estate industry like price escalation, intentional delay in completion by builders, selling one property to multiple buyers and others as such, RERA has formulated this significant document- the Builder-buyer Agreement to safeguard the interest of buyers as well as developers. It is a formal legal contract between buyers and builders with regards to the property they buy or sell.
One has to know about this builder-buyer agreement, read through and understand clearly the terms and conditions before buying a residential property/house and signing it to avoid any legal issues in the future. Here is a short glimpse of the builder-buyer agreement, its terms and conditions and importance before buying your dream home. Take a look!
The builder-buyer agreement puts forth following things to be kept in mind before signing a property deal.
Home Building Timeline- It is stated in the agreement that the completion of an apartment/flat should be within the speculated time period of 36-42 months after the commencement of construction. However, it is not mentioned that the residential apartment/flat should be given for possession from the date of booking. The developer is given the liberty to begin the construction as per this clause.
Cost Escalation- It is a clause in the agreement that mandates the price paid by the buyer (including the booking amount) should be included in the document as it disallows developers to charge additional amount in the later phase citing reasons such as the increase in raw materials, maintenance and other input costs.
Change in Area & Building Plan- The builder is benefitted here as this section in the builder-buyer agreement allows builders to increase the built-up area of the apartment/flat if required. With this, the buyer may be charged 10-15% extra, but the benefits in the inclusion of area may be marginal or nil. The builders can also take the consent of buyers in prior with regards to the change in the building plan in future.
Delay in Payment- A homebuyer is insisted (charged) to pay the interest when there is a delay in paying installment as per this clause. Also, if the payment is delayed beyond the certain period of time, the builder can cancel the allotment made to you, where you might have to lose a large amount of your hard earned money.
Payment on the Actual Cost Basis- Buyers are protected against extra costs from builders like electricity charges, membership, etc. as per this clause in the agreement. Buyers are required to pay only the cost that incurs on the actual cost basis at the time of the agreement.
Transfer Costs- With regards to this clause in the builder-buyer agreement, buyers have to pay the builders if the apartment/flat is resold before possession.
Importance of the Builder-buyer Agreement
Implementation of RERA has brought safety and security for the homebuyers in home buying and selling. However, many buyers are still unaware of this important agreement that may lead to confusions in the future if there is any legal issue in the property.
Since the builder-buyer agreement is a legal document between the buyers and developers, it helps you take a clear stand if any issue arises. Both the buyers and developers are duly responsible for it and they need to adhere to these terms and conditions for a smooth transition of property. Hence it is necessary to have a clear understanding of this contract before buying your dream home.
Ensure the builder-buyer agreement is as per RERA norms and it is to be mentioned in the agreement. By this, your property right is protected and you get what you have paid for. This agreement will empower you to stand up for your rights and it will also help you demand any amenities if they are not delivered to you as said. Therefore buyers, stay conscious and sign your builder-buyer agreement after you have read it clearly and in detail.