A first in model builder buyer agreement under RERA by Union Territories

Five Union Territories Chandigarh, Andaman & Nicobar Islands, Daman & Diu, Dadra and Nagar Haveli and Lakshadweep have taken a big step forward to incorporating RERA. As part of the same, UTs have laid a draft Agreement for Sale Rules, 2016. The same is available in public domain for review by prospective/existing home buyers before it is notified.

Following are the salient features of the Draft Agreement for Sales:

1) Timely delivery of the property is going to be the essence of any agreement between builder and home buyers. Promoter is required to clearly indicate the date of delivery of possession to the allottee in the Agreement itself. However, there is a provision for extension of this date in case of delay caused by due to war, floods, drought, fire, cyclone, earthquake or any other calamity caused by nature.
Our take: This is a good move. Builders used to fleece the penalty to buyers on pretext of Force majeure. This would help define clauses under Force majeure. Reasons like ban on bricks, underground water use etc. shall no longer be a escape route for builders.

2) Mandatory disclosure: As part of the agreement, there shall be a clear mention in the Agreement of date of grant of commencement certificate, clear land title giving the area of project and plot numbers, number of stories and plots in the project, carpet area and common area, share of allottee in common area, total price etc.
Our take: Specific mention of carpet area will help buyers judge the project better. This would help buyers get compensation for reduced carpet area offered to them at the time of possession.

3) Total Price is defined as including cost of land, cost of construction of apartment and common areas, internal and external development charges, prevailing taxes, cost of electric wiring and fire fighting equipment. Rules stipulate that total price is escalation free except when development changes are altered.
Our take: The only additional point of interest to buyers here are the taxes. Service taxes, labour cess and local taxes like VAT once included as part of the agreement would prevent builder from putting additional burden on the buyers on name of these taxes.

4) Additional taxes and cesses can be passed on to the buyers: Provided that in case there is any change / modification in the taxes, thesubsequent amount payable by the allottee to the promoter shall be increased/reduced based on such change / modification.
Our take: While buyer gets some clarity of prevailing taxes, the alteration of taxes any in future will still be borne by the home buyer.

5) Defective land title and clearances: In case of loss caused to allottee due to defective land title, promoter shall pay compensation to allottee and such claim shall not be barred by limitation provided under any law for the time being force. It also states that there is no time bar for claiming compensation against loss caused to allottee by defective land titles.
Our take: It is expected that promoter should take responsibility of land title and necessary clearance. Any loss to buyers due to this can be claimed from promoter. e.g. Farmer compensation charges can not be transferred to buyers hence. Even the ones who have already paid, can claim the same once RERA comes to force.

6) Allottees on their part would be required to ensure timely payments and can have their allotments cancelled if payments are delayed beyond a month.

Other sections of the model builder buyer agreement are in sync with RERA and hence not mentioned here for sake of brevity.

The Draft Builder Buyer Agreement is attached for reader’s reference.

Draft_Agreement_for_Sale_Real_Estate_Act_2016

Last updated: August 3, 2016 at 14:02 pm

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