For many in our country, buying a home or property has been a harrowing experience with project delays and at times huge losses owing to delays in getting possession. But now, with RERA [THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016] coming into effect from the 1stt of May 2017, a safety net is suddenly in place.
RERA has resulted in the framing of the “Agreement for Sale” Rules, 2017. Let us take a look at the situation prior to the enactment of RERA:
- There were no specific guidelines or format for a sale agreement which ensured fare rights to all parties. The often-heard complaint was that builder’s agreement to sell was one-sided
- In case of delay in payment by a buyer, the rate of interest charged was exorbitant
- There was no adequate compensation by builders on delay of the Projects
- Even if the builder agreed to a refund, 24%-28% of the price amount was deducted by most builders and there were long delays for the refund
- Proper cost breakups were seldom given and buyers were sold a property on the basis of super built-up area and not carpet area.
Thus, to avoid the above and more such trouble, RERA came up with a Proforma of Agreement to Sell. Let us take a look at how RERA’s proforma agreement protects a buyer’s interests and what a buyer should look for in his “Sale Agreement” to ensure its RERA compliance.
1) Pay for What You Get
Agreement should define carpet area or the actual usable area and not the ambiguous super built-up area
Agreement should indemnify buyer from losses or cost incurred on account of defective title
3) Fixed Price
No more fluid and meaningless price increase. Midway through a project, no change in price can be thrust upon the buyer. The agreement under RERA will have to detail the final amount payable and should have breakup of total sale price such as cost of apartment, cost of exclusive balcony or verandah areas, cost of exclusive open terrace areas, proportionate cost of common areas, preferential location charges, taxes, maintenance charges etc., if/as applicable.
4) Same Interest Applicable to Both Parties
Both the buyer and the project developer will have to pay the same interest on default. And this interest rate must be mentioned in the sales agreement. Also, the interest rate cannot be different from the rates benchmarked by The State Bank of India (SBI) as its prime lending rate.
5) Deliver on Time or Compensate/Refund
Under RERA compliant projects, the builders have to inform RERA as well the buyer about each stage of project completion. An occupancy certificate will have to be provided to the buyer, within three months of completion. On the delay of a Project, a buyer is entitled to withdraw from the Project and get the refund of the entire amount paid by him along with interest within 45 days of cancellation. Also in case, the buyer does not intend to withdraw, the builder has to pay an interest as per the RERA Rules for every month of delay.
6) Defect Liability
If buyer registers a complaint within five years from taking possession of the property regarding any structural defect, the developer/promoter as per the agreement for sale will have to rectify it free of cost within 45 days of filing such a complaint.
7) No Modification without Buyers’ Consent
A builder will have to take a written consent from RERA as well as at-least 2/3rd of the project allottees to make a modification in the project. These include any kind of modification including layout plans & specifications; the nature of fixtures, fittings and other amenities etc. The same has to be agreed upon by the architect-in-charge, the building company’s chartered accountant and the chief engineer.
In short, buyers now have a basic safety net in the name of RERA which makes their investment a safe and peaceful affair. Ensure the above points are incorporated in your “Sale Agreement”.
If you are planning to buy a property sometime soon, RealDocs has created a mobile app that aims to help you determine what documents are required for a particular property based on the type of property, and most importantly, the applicable laws of your state. Feel free to download the RealDocs app from the Google Play Store, by clicking here.