Builder-Buyer Agreement: 15 Clauses You Must Check Before Signing

Introduction

The builder-buyer agreement is the most important document in your property purchase. It's legally binding, and what's written in it will determine your rights if things go wrong.

Critical Clauses to Review

1. Property Description

Should clearly state:

• Exact flat number and floor
• Tower/building name
• Carpet area (not just super built-up)
• Parking slot number
• Common area share

Red flag: Vague descriptions like "approximately" or "as per plan."

2. Price and Payment Schedule

Verify:

• Total price in numbers and words
• GST applicability
• Payment milestones linked to construction
• Mode of payment

Negotiate: Construction-linked plan instead of time-linked.

3. Possession Date

Must include:

• Specific date (not "within 36 months")
• Grace period (maximum 6 months acceptable)
• Penalty for delay

Standard penalty: ₹5-10 per sq ft per month of delay.

4. Delay Compensation

Check if agreement mentions:

• Automatic compensation without legal action
• Monthly rent compensation amount
• Interest on paid amount

RERA requirement: Interest at SBI MCLR + 2% for delays.

5. Carpet Area Definition

As per RERA:

• Carpet area = usable floor area
• Excludes walls, balcony, utility area

Verify calculation matches what you're paying for.

6. Specifications and Amenities

Agreement should list:

• Flooring type and brand
• Bathroom fittings
• Electrical fittings
• Door and window specifications
• Common amenities promised

Get it in writing: Attach brochure as annexure.

7. Additional Charges

All charges must be listed:

• Preferential location charges
• Floor rise charges
• External development charges
• Infrastructure charges
• Club membership
• Parking fees

Red flag: "Charges as applicable" without specification.

8. Maintenance Deposits

Should specify:

• Amount per sq ft
• Period covered
• What it includes
• Society formation timeline

Watch for: Excessive deposits (more than 24 months).

9. Cancellation and Refund

Buyer-initiated cancellation:

• Deduction percentage (max 10% under RERA)
• Refund timeline (45-90 days)
• Interest on refund amount

Builder-initiated cancellation:

• Full refund with interest
• Compensation for inconvenience

10. Force Majeure

Acceptable events:

• Natural disasters
• Government actions
• War or civil unrest

Not acceptable: Labor shortage, material price increase, fund shortage.

11. Changes in Plans

Should state:

• Major changes require buyer consent
• Minor changes (< 3%) don't need consent
• Compensation for area reduction
• Refund for reduced amenities

12. Transfer and Assignment

Your rights:

• Ability to sell before possession
• Transfer charges (should be reasonable)
• NOC process and timeline

13. Dispute Resolution

Check:

• RERA as first forum
• Arbitration clause (location matters)
• Court jurisdiction

Negotiate: Local jurisdiction, not builder's city.

14. Loan Default Clause

Avoid clauses that:

• Make you liable if builder's loan defaults
• Allow bank to claim your flat for builder's debt

15. OC/CC Commitment

Must include:

• Builder's obligation to obtain OC/CC
• Timeline for obtaining
• Buyer's right to withhold final payment until OC

RERA Protections

As per RERA, builders cannot:

• Take more than 10% before agreement registration
• Change plans without 2/3rd buyer consent
• Delay beyond promised date without compensation
• Charge more than carpet area
• Include unfair one-sided clauses

Before Signing

Do This:

1. Read entire agreement (30-50 pages)
2. Have a lawyer review
3. Cross-check with brochure promises
4. Negotiate unfavorable clauses
5. Get all verbal promises in writing
6. Keep a signed copy

Don't Do This:

1. Sign blank pages
2. Trust verbal assurances
3. Skip annexures
4. Ignore fine print
5. Rush due to pressure

Conclusion

A few hours spent reviewing the agreement can save you years of trouble. Don't hesitate to negotiate – builders often modify clauses for serious buyers. If a builder refuses to change clearly unfair terms, consider walking away.