What Is a Builder-Buyer Contract?
The"AgreementforSale"isactuallya"BuilderBuyerAgreement."AccordingtotheBuilder BuyerAgreement,thepropertyinquestionisofficiallytransferredintothenameofthe newowner,subjecttoasetofcriteriathatbothpartiescanagreeto.
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Theterms,conditions,andclausesbetweenabuilder&ahomebuyerarelaidforthina builderbuyeragreement.Thebuilder buyeragreementcontainsclausespertainingtothe propertyinquestion,deliveryinformation,andtermsrelatingtodefaultandlateproject delivery,amongotherthings.
All You Need to Know About Builder Buyer Agreements BBA
TheIndianrealestatemarketwasonceplaguedbyhaltedconstructionprojects,which keptcustomers'moneylockedupintheseunfinishedendeavors.BeforetheRERAwasput inplace,therewasnotrustworthymechanismorredressforunhappyhomebuyers. However,onedocumentthatsafeguardstherightsofhomebuyersandguaranteesthatthe deliveryisincompliancewiththeagreedterms&conditionsistheBuilderBuyer Agreement.TheimportanceoftheBuilderBuyerAgreementhasmultipliedinlightofthe SupremeCourt'sdirectivetodraughtanagreementthatcomplieswiththeRealEstate (Regulation&Development)Act,2016.
Thebuyermustmakesurethattheclausespecifiesexactlywhatwillhappenifanyparty defaults.Thebuilder'sobligationsundertheBuilderBuyerAgreementmustbeupheldif thebuyeristhinkingaboutpurchasingahousethatisstillunderconstruction.
Thebuyerofthepropertymustmakesurethatthepersonalinformation,includingthe name,father'sname,address,PANcard,andAadhaarcard,areaccuratebecauseitcanbe time consuminganddifficulttoaltertheBuilderBuyerAgreement.
TheentirepropertysaleisgovernedbytheBuilderBuyerAgreement.Itcontains provisions,annexures,terms,anduniquedetailsregardingthesaleortransferofproperty.
Thepurchasermustconfirmthatthepropertyinquestionisfreeandclearofliens. Encumbrancesdescribethedebtormortgageplacedonthesubjectproperty.Additionally, thepurchasermayrequestthe"EncumbrancesCertificate."Thiscertificatewouldlistall borrowingoccurrencesandanyactiveloanssecuredbytheproperty.
TheBuilderBuyerAgreementisacrucialagreementthatsetsforththetermsand conditionsofthesaleandtransferofrealestate.Butbecausethisisalegaldocument,the purchasermustmakesureofthefollowing:
ABuilderBuyerAgreementisactuallyadocumentthatismoresignificanttothebuyer. Beforecommittingtothecontract,thebuyermustcarefullyreviewtheterms&conditions andensurethatthebuilderhasobtainedallnecessaryapprovals.BeforesigningtheBBA, thehomebuyermustmakesurethatallnecessarypaperworkhasbeenapprovedbyRERA, includingtheCommencementCertificate(CC),OccupancyCertificate(OC),FireNOC,and municipalpermissions.
What should you look out for before you sign a builder buyer agreement?
Before RERA, a builder-buyer agreement
TheBuilderBuyerAgreementwasseverelyskewedinfavourofrealestatedevelopers& builderspriortotheRERAAct,whichdidnothingtoprotecttheinterestsofconsumers.
Inaccordancewiththepre RERABuilderBuyerAgreement,ifahomebuyermissesa payment,interestofupto20%willbeassessedagainstthem.However,thepenaltyrate wasonly2percentifthebuilderordeveloperswereindefault.
TheBuilderBuyerAgreementhadaprovisionforpriceincreasesinthepre RERAera.The costoftheresidentialunitscouldberaisedatanytimebythebuilders.Thebuildersused toboostthepricesregardlessofprojectdelays,blaminganincreaseinthecostofbuilding supplies.
Provision for Price Rise
ThetransferfeeswerenotincludedintheBuilderBuyerAgreement(BBA)undertheprior arrangement.Whentheownersoldittosomeonewithouttakingpossession,transferfees weredue.Thebuildersusedtochargehightransferfeesbecausetherewasnoindicationof thecosts.
There is no mention of transfer charges
Extra Services based on Actual Costs
Accordingtothepre RERABuilderBuyerAgreement,possessionofthepropertywould begin36to42monthsafterconstructionbegan.Nowhereinthepaperworkwasitstated thatthetimeperiodbeganonthedaytheapartmentwasreserved.Additionally,the builder'sdiscretiondeterminedthedurationofconstructionandthedayitbegan.
Thepre RERAagreementstaxedthehomebuyersandpermittedchangestotheproperty's location.Thehomebuyershadtopayupto15%morethantheinitialprice,eventhough thesuperarearose.Eventhoughtheyreceivednoadvantagefromthelargerregion,the homebuyerswereresponsibleforcoveringthisexpenditure.
Area Change
Thebuildershadahistoryofcharginghighchargesforancillaryservicespriortothe implementationofRERA.Foramenitiesliketheclubhouse,security,upkeep,swimming pool,andothersuchservices,thehomebuyerhadtopayapremium.Additionally,the BuilderBuyerAgreementusedtonotmentionPreferentialLocationCharges(PLC),butthe homebuyerwassuddenlychargedforthese.
Time Limit for Construction
Builder's Proforma Submission
Homebuyers'complaintshavebeeneffectivelyhandledsincesincetheRealEstate RegulatoryAuthoritywasestablishedandtheRERAActwasintroduced.Thebuilder friendlyBuilderBuyerAgreementissuehasbeenaddressedbythelaw,whichhas simplifiedtheBuilderBuyerAgreement.TheRERAactaimstobeanall inclusivedocument thattakesintoaccounttheneedsofallstakeholders.TheBuilderBuyerAgreementisa contractbetweenapromoterandanallotteethathasbeenapprovedincompliancewith theRERAAct.ThemajorelementsoftheBuilderBuyerAgreementfollowingthe implementationofRERAarelistedbelow.
Whenregisteringaproject,thebuilderisrequiredbytheRERAActtopresentanexample proformaoftheBuilderBuyerAgreement(BBA)totheauthorities.AccordingtotheAct, therealestatedevelopermust
Earnest Money Provision
AccordingtotheRERAAct,thebuilder-buyerrelationshipwouldbeguidedbytheBuilder BuyerAgreement(BBA).TheAgreement'stermswillserveasaroadmapfortheactions anddeliverables.
Inafewofstates,theBuilderBuyerAgreement(BBA)isnotregistered.TheAgreementfor Salemustberegisteredwith10%ofthepurchasepriceatthetimeofbooking,accordingto RERA,nevertheless.
Incontrasttothepast,thebuilderisnolongerpermittedtodemandanearnestmoney depositthatisgreaterthan10%oftheresidentialunit'soverallcost.Thelegalregistration ofthisagreementistheresponsibilityofboththebuilderandthehomebuyertomakeit enforceable.
A Bright Light
Registration fees for Builder-Buyer Agreements
After RERA, the Builder Buyer Agreement
Parking
Theterms,conditions,guidelines,andsub-causesthatwillcontrolthetransferofthe relevantpropertytothehomebuyerarelistedintheBuilderBuyerAgreement(BBA).
Thebuyer'sname
Built
Informationabouttheservicesoffered specifics plan Feesforcancellation,etc.
Itisacomprehensivedocumentthatmayspanseveralpages.
How to draught a builder-buyer contract
Format for a Builder-Buyer Agreement
Everyspecificoftheproject'sdeliveriesandfacilitiesaredetailedintheBuilderBuyer Agreement.Additionally,itwillserveasaguidefortherulesthatwillapplyin circumstancesofeitherparty'sdefault.
TheBuilderBuyerAgreement(BBA)typicallyincludesthefollowinginformation:
installment
Areaoftheapartment Superbuiltuparea uparea
AlthoughtheBuilderBuyerAgreement(BBA)doesnotyethaveanestablishedorstandard format,weareattachinganexampleformatinaccordancewiththeRERArules.
Thehomebuyerisresponsibleforpayingthestampdutyaftertheconveyancehas happened.Thestampdutyratescanbeadjusteddependingontheamountpaidatthetime ofbooking.Thisclausebenefitshomebuyersbecausethedeveloperisboundbytheterms oftheBuilderBuyerAgreement.
TherewillbenoroomforambiguityorguessworkaccordingtoSection13(2)oftheRERA Act,whichwillregulateeveryfacetofthebuilder buyerinteraction.
Thedeveloper'sname Addressforthebuilding Purchase relatedterms
Supreme Court Decision Regarding Builder-Buyer Contract
Homebuyersarealwaysrecommendedtoexamineeveryword&conditionoftheBuilder BuyerAgreementindetailasitisalengthycontract,andtheymustinvestinaprojectonly afterbeingcompletelysatisfied.
TheSupremeCourtofIndiarecentlystatedthatthenationneedstotransitiontoacommon BuilderBuyerAgreement(BBA).TheBuilderBuyerAgreementwasdeemedbythetop courttobeacrucialtoolforprotectinghomebuyers'interests.TheSupremeCourturged thepartiestocreateathoroughproformaoftheBuilderBuyerAgreementinaccordance withtheRERArules.
Inconclusion,theBuilderBuyerAgreement(BBA),whichislegallyobligatoryonthereal estatedeveloper,isacrucialinstrumentgoverningtheinterestsofhomebuyers.The authoritiesmustworktocreateastandard,RERA approvedBuilderBuyerAgreement structure.
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AccordingtotheRERAAct,thereshouldbenoroomforambiguityinthetermsand conditions,andeachspecificrequirementmustbespelledoutindetail. Youmightseektheassistanceofarealestateattorneywhofocusesonthetermsand subclausesthatgoverntheconnectionbetweenabuyerorabuildertocreateawatertight BuilderBuyerAgreement.Additionally,youmightuseoneofthemanyBuilderBuyer AgreementsthatarepermittedbydifferentstateRERAagencies.