All You Need to Know About Builder Buyer Agreements BBA

The terms, conditions, and clauses between a builder & a homebuyer are laid forth in a builder buyer agreement. The builder-buyer agreement contains clauses pertaining to the property in question, delivery information, and terms relating to default and late project delivery, among other things.

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The Indian real estate market was once plagued by halted construction projects, which kept customers’ money locked up in these unfinished endeavors. Before the RERA was put in place, there was no trustworthy mechanism or redress for unhappy homebuyers. However, one document that safeguards the rights of homebuyers and guarantees that the delivery is in compliance with the agreed terms & conditions is the Builder Buyer Agreement. The importance of the Builder Buyer Agreement has multiplied in light of the Supreme Court’s directive to draught an agreement that complies with the Real Estate (Regulation & Development) Act, 2016.


What Is a Builder-Buyer Contract?

The “Agreement for Sale” is actually a “Builder Buyer Agreement.” According to the Builder Buyer Agreement, the property in question is officially transfer into the name of the new owner, subject to a set of criteria that both parties can agree to. The entire property sale is governed by the Builder Buyer Agreement. It contains provisions, annexures, terms, and unique details regarding the sale or transfer of property.


What should you look out for before you sign a builder-buyer agreement?

The Builder Buyer Agreement is a crucial agreement that sets forth the terms and conditions of the sale and transfer of real estate. But because this is a legal document, the purchaser must make sure of the following:

The buyer of the property must make sure that the personal information, including the name, father’s name, address, PAN card, and Aadhaar card, are accurate because it can be time-consuming and difficult to alter the Builder Buyer Agreement.

A Builder Buyer Agreement is actually a document that is more significant to the buyer. Before committing to the contract, the buyer must carefully review the terms & conditions and ensure that the builder has obtained all necessary approvals. Before signing the BBA, the homebuyer must make sure that all necessary paperwork has been approved by RERA, including the Commencement Certificate (CC), Occupancy Certificate (OC), Fire NOC, and municipal permissions.


The purchaser must confirm that the property in question is free and clear of liens. Encumbrances describe the debt or mortgage placed on the subject property. Additionally, the purchaser may request the “Encumbrances Certificate.” This certificate would list all borrowing occurrences and any active loans secured by the property.

The buyer must make sure that the clause specifies exactly what will happen if any party defaults. The builder’s obligations under the Builder Buyer Agreement must be upheld if the buyer is thinking about purchasing a house that is still under construction.


Before RERA, a builder-buyer agreement

The Builder Buyer Agreement was severely skewed in favour of real estate developers & builders prior to the RERA Act, which did nothing to protect the interests of consumers.

In accordance with the pre-RERA Builder Buyer Agreement, if a homebuyer misses a payment, interest of up to 20% will be assesses against them. However, the penalty rate was only 2 percent if the builder or developers were in default.


Time Limit for Construction

According to the pre-RERA Builder Buyer Agreement, possession of the property would begin 36 to 42 months after construction began. Nowhere in the paperwork was it stated that the time period began on the day the apartment was reserved. Additionally, the builder’s discretion determined the duration of construction and the day it began.


Provision for Price Rise

The Builder Buyer Agreement had a provision for price increases in the pre-RERA era. The cost of the residential units could be raise at any time by the builders. The builders used to boost the prices regardless of project delays, blaming an increase in the cost of building supplies.


Area Change

The pre-RERA agreements taxed the homebuyers and permitted changes to the property’s location. The homebuyers had to pay up to 15% more than the initial price, even though the super area rose. Even though they received no advantage from the larger region, the homebuyers were responsible for covering this expenditure.


Extra Services based on Actual Costs

The builders had a history of charging high charges for ancillary services prior to the implementation of RERA. For amenities like the clubhouse, security, upkeep, swimming pool, and other such services, the homebuyer had to pay a premium. Additionally, the Builder Buyer Agreement used to not mention Preferential Location Charges (PLC), but the homebuyer was suddenly charge for these.


There is no mention of transfer charges

The transfer fees were not include in the Builder Buyer Agreement (BBA) under the prior arrangement. When the owner sold it to someone without taking possession, transfer fees were due. The builders used to charge high transfer fees because there was no indication of the costs.


After RERA, the Builder-Buyer Agreement

Homebuyers’ complaints have been effectively handle since since the Real Estate Regulatory Authority was established and the RERA Act was introduce. The builder-friendly Builder Buyer Agreement issue has been address by the law, which has simplify the Builder Buyer Agreement. The RERA act aims to be an all-inclusive document that takes into account the needs of all stakeholders. The Builder Buyer Agreement is a contract between a promoter and an allottee that has been approve in compliance with the RERA Act. The major elements of the Builder Buyer Agreement following the implementation of RERA are list below.


Builder’s Proforma Submission

When registering a project, the builder is require by the RERA Act to present an example proforma of the Builder Buyer Agreement (BBA) to the authorities. According to the Act, the real estate developer must


Earnest Money Provision

In contrast to the past, the builder is no longer permit to demand an earnest money deposit that is greater than 10% of the residential unit’s overall cost. The legal registration of this agreement is the responsibility of both the builder and the homebuyer to make it enforceable.


A Bright Light

According to the RERA Act, the builder-buyer relationship would be guide by the Builder Buyer Agreement (BBA). The Agreement’s terms will serve as a roadmap for the actions and deliverables.


Registration fees for Builder-Buyer Agreements

In a few of states, the Builder Buyer Agreement (BBA) is not register. The Agreement for Sale must be register with 10% of the purchase price at the time of booking, according to RERA, nevertheless.

The homebuyer is responsible for paying the stamp duty after the conveyance has happened. The stamp duty rates can be adjust depending on the amount paid at the time of booking. This clause benefits homebuyers because the developer is bound by the terms of the Builder Buyer Agreement.


Format for a Builder-Buyer Agreement

Every specific of the project’s deliveries and facilities are details in the Builder Buyer Agreement. Additionally, it will serve as a guide for the rules that will apply in circumstances of either party’s default.

Although the Builder Buyer Agreement (BBA) does not yet have an established or standard format. We are attaching an example format in accordance with the RERA rules.

There will be no room for ambiguity or guesswork according to Section 13 (2) of the RERA Act, which will regulate every facet of the builder-buyer interaction.


The Builder Buyer Agreement (BBA) typically includes the following information:

  • The buyer’s name
  • The developer’s name
  • Address for the building
  • Purchase-related terms
  • Area of the apartment
  • Super built up area
  • Built up area
  • Information about the services offered
  • Parking specifics
  • installment plan
  • Fees for cancellation, etc.

It is a comprehensive document that may span several pages.


How to draught a builder-buyer contract

The terms, conditions, guidelines, and sub-causes that will control the transfer of the relevant property to the homebuyer are list in the Builder Buyer Agreement (BBA). According to the RERA Act, there should be no room for ambiguity in the terms and conditions, and each specific requirement must be spell out in detail.

You might seek the assistance of a real estate attorney who focuses on the terms and subclauses that govern the connection between a buyer or a builder to create a watertight Builder Buyer Agreement. Additionally, you might use one of the many Builder Buyer Agreements that are permit by different state RERA agencies.

Homebuyers are always recommended to examine every word & condition of the Builder Buyer Agreement in detail as it is a lengthy contract, and they must invest in a project only after being completely satisfied.


Supreme Court Decision Regarding Builder-Buyer Contract

The Supreme Court of India recently stated that the nation needs to transition to a common Builder Buyer Agreement (BBA). The Builder Buyer Agreement was deem by the top court to be a crucial tool for protecting homebuyers’ interests. The Supreme Court urged the parties to create a thorough proforma of the Builder Buyer Agreement in accordance with the RERA rules.

In conclusion, the Builder Buyer Agreement (BBA), which is legally obligatory on the real estate developer. Is a crucial instrument governing the interests of homebuyers. The authorities must work to create a standard, RERA-approved Builder Buyer Agreement structure.



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