Affordability, transparency and bringing faith of homebuyers and investors into existence is main agenda behind the introduction of the Real Estate Regulation and Development Act (RERA).
Keeping in mind and safeguarding the rights of homebuyers a proper format of agreement between builder and builder has been drafted in RERA Rules which were further notified by the States.
This builder-buyer agreement is an unduly significant document as it is a legal contract between builder and buyer and is used in court against builder if he doesn’t keep his commitments.
Scenario prior to the RERA Act was bit different. Frauds were carry out without any fear as there was no law for the same. Intentional delay in possession, selling property to multiple buyers, price escalation were some of the common frauds.
To overcome the same builder-buyer agreement has come into the picture. One can look for the following things to be kept in mind while going through the agreement:
- Construction Timeline: It says that builder will grant possession of the property within 36-42 months from the ‘start of construction. It doesn’t say that possession will be granted within the specified time from the ‘date of booking.
- Price escalation Clause: This clause is added in the agreement for the benefit of builders wherein the builders penalize the buyer by raising the cost, claiming that raw material and other input costs have increased even though the project is delayed by builder’s fault.
- Area Change: If builder changes the square foot area, he charges extra for it. The buyer may end up paying 10-15% extra, while the benefit of additional area may be marginal or nil.
- Payment Delay: With reference to this clause, if the buyer delays in paying installment, he will have to pay interest as well. The developer may include a clause stating that if payment is delayed beyond a point, he bags the right to cancel your allotment and that you may have to damage the heartfelt money, which could be as high as 20-25% of the total cost.
- Payment on the Basis of Actual Cost: At the time of agreement it is said that payment is to be paid on actual cost basis. Later he may bring some unpleasant charges like membership, electricity connection charges etc. which he may not specify but can be added later on.
- Transfer Charges: in accordance with this clause, if the apartment is resold prior to the possession, then the builder has to pay these charges.
Importance of Builder Buyer Agreement in RERA Litigation
In the light of above article, we can reach to an outcome that builder-buyer agreement is a legal document which is binding on both the parties and adherence of the same is the responsibility of the parties therein so, it is the responsibility of a vigilant buyer to read and understand the agreement thoroughly.
Builder-buyer agreement being a pivotal document is pertinent to the RERA Legal proceedings as based on this agreement the cases may take a turn in favor or against.
So it is advisable to have a profound study of the agreement before proceeding with the RERA Complaints.
We at Centrik, are one of the top RERA Consultants in RERA Litigation. In case you have any queries regarding the same or want to connect with our experts you can write to us at firstname.lastname@example.org
Note – Please note that the above article is for education purpose only. This is based on our interpretation of laws which may differ person to person. Readers are expected to verify the facts and laws