Builder-Buyer Agreement- What you should know

3 min read


There are many things that you need to be aware about when you are buying a home. The agreement between the buyer and builder is one such thing. This is the only document which safeguards your own rights and hence you should be reading it thoroughly with a view towards being clear about everything at the outset. This is one of the most important legal documents for any homebuyer. This contract will have all necessary terms and conditions that both buyers and builders have to meet from their ends. The terms and conditions stated in this document will also be protecting your own rights as the buyer so do not neglect the importance of the same.

RERA has been a major change for the Indian real estate sector. Until it was introduced, the agreement usually contained the land title, details of clearances/permissions that were received and also the duration for the same along with the expected time before handover of possession, amenities/facilities to be given, extra penalties/payments in particular circumstances and so on. For projects under construction, the agreement would have information about the apartment/flat number, the floor, wing area and the cost along with the completion period.

Builder-Buyer Agreements after RERA

After RERA was introduced, the agreement between the builder and buyer has to have all possible terms and conditions clearly laid out in the agreement. All projects which are RERA registered should mention the same. Both parties will now have to make sure that the agreement adheres to the regulations laid down by RERA and the project has to be registered under RERA as well.

The RERA section is 11 (4) which talks about the builder-buyer agreement. Here are some of the major take-aways for you:

  • Builder will have full responsibility for all the functions and obligations as mentioned under RERA based on the sale agreement till the handover of possession to the buyer or association.
  • The builder will have responsibility for any defects in the structure or other flaws for the period as stated in sub-section (3) in section 14. This responsibility will hold for this particular duration even after delivery of apartments/plots to customers.
  • Buyers should check the RERA site and check the RERA registration number for their project. All details of the same will be posted online and the format for the document is also given online.
  • The agreement should be registered.

The agreement should ideally be scrutinized by a lawyer or real estate professional in order to stay on the safe side and safeguard the buyer from any clauses which may lead to issues in the future. The Builder-Buyer agreement is of prime importance since it gives you the right towards the housing unit/property that you are purchasing. You should scrutinize the compensation clauses for any delays and the place for filing complaints in case there is any dispute.

Also check the clauses for resolution of disputes along with amenities and other specifications of your housing unit. Check whether these are given to you when you get possession. The agreement will help you demand these amenities if the builder does not provide you the same. The document will also help you work out your own legal rights to ask for something from the builder in case of any legal issue. Sign the agreement once you have checked it carefully and properly read it.

Things to check in Builder-Buyer Agreement

Apart from the things mentioned above, here are the top things you should keep an eye on when checking your Builder-Buyer agreement:

  • Certificate of Completion- Whenever you get possession of your home, the developer has to give you the completion certificate for the same. This is given by the municipality or requisite authority which states that the housing unit adheres to the plan approved. This certificate is a must for registering your property and getting other facilities. The completion certificate provision should be there in your agreement. If it is not there, make sure that you get it inserted, i.e. the agreement should have a clause which makes it mandatory for the builder to give you the completion certificate upon delivery of your housing unit.
  • Possession- Read the clauses for delivery/possession of your housing unit. In case the agreement has a clause that the delivery will be given within a particular duration, say 100 days from the beginning of construction without any fixed date, be very careful. Make sure that a fixed possession date is given in the agreement, after which the builder should pay you compensation. This is another clause that should be there in the agreement.
  • Building Plan- Builders cannot change the plans of any building without getting written approval from buyers. Check for any such clause in the agreement and make sure that your builder asks for your consent every time he/she wishes to get the building plan changed.
  • Indemnity Clause- This is a vital aspect since it offers protection/security for the builder against any financial losses/burdens in case of any legal issue/dispute with the property. Make sure that there is the clause which says that in case of any such legal issues, the seller will be offering compensation to the buyer in case the latter has any loss incurred due to the same. Compensation should be at the market rate that prevails then.
  • Opting Out- The right to cancel the purchase deal should always be there with the homebuyer in particular situations without having to bear any penalty/fines. Suppose the builder does not provide suitable documents that you need or there are any legal/title issues prior to the sale deed being executed. In such circumstances, buyers should have the right to cancel their deals. This should be clearly mentioned in the Builder-Buyer agreement.

The Builder-Buyer agreement is thus a very important legal document that not only should you thoroughly read and understand before signing, you should also get the help of a lawyer or experienced professional to check the same. Read up on the above mentioned tips to be fully prepared on your part.

Resident Editor