The Central Government was recently directed by the Supreme Court for drafting the model buyer-builder agreement which may also be adopted by Indian States. There are several issues at times with the agreements that developers currently get their buyers to sign. Buyers should themselves be careful to avoid signing agreements of a lopsided nature. Developers are required to put up such agreements on the website of RERA. However, knowing more about the best practices behind these agreements is a must. You should go through these developer agreements on the RERA website. Some Indian States like Maharashtra also have their own model agreements.
Get more clarity on the penalty payable if you delay in paying a certain sum of money to the developer. Developers sometimes indicate higher charges than what they are liable to pay themselves for delaying possession. There should be some parity between these two charges. RERA recommends a rate of interest which is equal to the prime lending rate of the SBI and two percentage points added to the same.
Ambiguity should not be present on the delivery of the project. The construction period should not be too long. Even if a project will be completed in a period of three years, the developer may state this as five years in the firm’s filing on the website of RERA according to the Business Head, Data Intelligence and Asset Management, Square Yards, Anand Moorthy. He adds that this is done by developers to avoid paying penalties to buyers for possession delays. Moorthy states that developers can do this since there are no timelines prescribed for project completion. He also advises buyers to watch out for clauses limiting their freedom to sell their properties anytime after purchase. He feels that if someone has purchased an asset, then he or she should have complete freedom to sell the same as well. Look out for clauses mandating payments or charges to developers while selling a property while it is still in the construction stage or within a particular timeline. Watch out for force majeure clauses in the agreement too.
For a detailed report on this read the articles we were featured in:
The Economic Times: https://bit.ly/3Ikv7zQ
Published Date: Jan 20, 2022
