All You Need To Know About Builder Buyer Agreements

Builder-Buyer Agreement most recent

Builder Buyer Agreement – Supreme Court: “Builder is legally required to get the Completion Certificate (CC)”

The Supreme Court has ruled that a builder is required by law to get the structure’s Completion Certificate. Even if the owners of the apartments take possession before the completion certificate is issued, the builder is still required to get one.

The Supreme Court ruled that even if it was improper for flat owners to take possession prior to the release of the Completion Certificate, this shouldn’t stop the builder from requesting the certificate. The builder must get a Completion Certificate; the unit owner is not responsible for doing so.

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



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At one point, delayed real estate projects plagued the Indian real estate market, causing buyers’ money to get trapped in such incomplete projects. There was no reliable recourse or process in place for displeased homebuyers prior to the implementation of RERA. However, one document that safeguards the rights of homebuyers and guarantees that the delivery is in compliance with the agreed terms and conditions is the Builder Buyer Agreement.

The relevance 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 and Development) Act, 2016.


What exactly is a builder-buyer agreement?

The “Agreement for Sale” is actually a “Builder Buyer Agreement.” According to the Builder Buyer Agreement, the property in question is officially transferred into the name of the new owner, subject to a set of criteria that both parties might 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 Aadhar card, are accurate since 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. The buyer must carefully examine the terms and conditions before signing the contract and confirm that the builder has secured all required permissions. 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 get the “Encumbrances Certificate.” This certificate would list all borrowing occurrences and any active debts secured by the property.

The buyer must make sure that the provision specifies exactly what will happen if either 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.

The Builder Buyer Agreement does not have a standardised format throughout India, despite RERA’s participation. The text became biassed as builders continued to add terms in their favour.



Builder Buyer Agreement before RERA

The Builder Buyer Agreement was severely skewed in favour of real estate developers and builders prior to the RERA Act, and purchasers’ interests were not adequately safeguarded.

In accordance with the pre-RERA Builder Buyer Agreement, a homebuyer would be charged interest of up to 20% if they missed a payment. The penalty rate was just 2 percent, though, if the builder or developers failed.


Maximum Construction Period

According to the pre-RERA BBA, 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 might be raised 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 homeowners 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 homeowner had to pay a premium. Additionally, the Builder Buyer Agreement previously didn’t specify Preferential Location Charges (PLC). However, the buyer of the house was suddenly charged.


No Mention to Transfer Fees

The transfer fees were not included 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 demand high transfer fees since there was no indication of the costs.



After RERA

Homebuyers’ complaints have been effectively handled since since the Real Estate Regulatory Authority was established and the RERA Act was introduced. The builder-friendly Builder Buyer Agreement issue has been addressed by the law, which has simplified the Builder Buyer Agreement. The RERA act aims to be an all-inclusive document that takes into account the demands of all stakeholders. The Builder Buyer Agreement is a contract between a promoter and an allottee that has been approved in compliance with the RERA Act. The major elements of the Builder Buyer Agreement following the adoption of RERA are listed below.


Builder’s Proforma Submission

When registering a project. The builder is required 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 permitted 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 Guiding Light

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


Registration fees 

(BBA) is not registered in several states. However, RERA stipulates that the homebuyer must register the Agreement for Sale with 10% of the purchase price at the time of booking.

Once the conveyance has taken place, the homebuyer will pay the stamp duty. The stamp duty rates might be adjusted depending on the amount paid at the time of booking. This clause benefits homebuyers since the developer is bound by the terms of the Builder Buyer Agreement.




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 listed in the (BBA). According to the RERA Act, there should be no room for ambiguity in the terms and conditions. And each specific need must be spelled out in detail.

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

Homebuyers are always recommended to examine every word and 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 deemed by the top court to be a crucial tool for protecting purchasers’ 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 controlling the interests of purchasers. The authorities must work to create a standard, RERA-approved Builder Buyer Agreement structure.





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Disclaimer: The views of this expressed above are for informational purposes only based on the industry reports & related news stories. does not guarantee the accuracy of this article, completeness, or reliability of the information & shall not be held responsible for any action taken based on the published information.
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