This is how to Draft a Builder-Buyer Agreement that Protects You
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Buying a flat or apartment in India? Then your builder-buyer agreement is the single most important legal document you will sign. It outlines your rights, obligations, payment schedule, delivery timeline, and dispute resolution.
If poorly drafted — or if you blindly sign what the builder gives you — you could lose time, money, and even the flat itself.
What Is a Builder-Buyer Agreement?
This is a legal contract between the property developer (builder) and the purchaser (you). It lays down the terms of the property sale and delivery. It becomes legally binding once registered.
Most buyers are handed a standard pre-printed agreement by builders. But remember — you have the right to negotiate clauses that impact your rights.
Why It’s Legally Important
In disputes about possession delay, quality, refund, or cancellation — courts and consumer forums look at the builder-buyer agreement to assess who's at fault.
If you didn’t review it properly or accepted vague clauses, you may not have a strong legal position.
Also, under RERA (Real Estate Regulation and Development Act), certain terms are mandatory in every builder agreement. Learn more here: When to Use RERA vs Consumer Forum for Real Estate Complaints
Key Clauses You Must Include
1. Project Details & Apartment Specifications
The agreement must mention the exact unit number, carpet area, floor plan, parking allotment, and project layout.
2. Payment Schedule
The agreement must outline when and how much you need to pay at each stage — booking, foundation, slab, etc. Ensure there's clarity on penalties for delays — from both sides.
3. Possession Timeline
This clause must specify the expected date of possession. RERA allows a maximum of 2 years delay with justification. Demand inclusion of late penalty for delays caused by the builder.
4. Penalty Clause for Delay
Builders should be liable to pay interest or compensation if possession is delayed without valid reason. Refer to: Builder Delay in Possession? Here’s What Indian Law Says
5. Construction Quality and Materials
The builder must commit to using materials and specifications as per the approved layout and brochure. Any deviation without consent can be challenged.
6. Cancellation & Refund Policy
If either party wants to cancel — what happens? What deductions apply? Refund timeline should be explicitly stated.
7. Force Majeure
This clause protects builders from liability in case of natural disasters, war, or government bans. Ensure this clause isn’t abused to delay possession.
8. Defect Liability Period
Under RERA, the builder is responsible for fixing structural defects within 5 years of handover.
9. Dispute Resolution
Specify where disputes will be resolved — RERA authority, Consumer Forum, or Arbitration. Mention the applicable jurisdiction.
What RERA Says About These Agreements
According to Section 13 of RERA, builders cannot accept more than 10% of the flat cost without signing a formal builder-buyer agreement.
Also, the agreement must be registered and contain:
- Project completion timeline
- Specifications and layout approvals
- Payment terms
- Common areas and amenities
- Allotment letter details
Failure to follow these rules is a punishable offense under the Act.
Buyer Rights and Legal Recourse
If the builder violates the terms of the agreement, you have several options:
- File a complaint with RERA authority under your state
- Approach the Consumer Forum for compensation or refund
- Initiate civil suit for breach of contract or specific performance
Read: How to File a Property Dispute in Civil Court: Step-by-Step Guide
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Final Thoughts: Don’t Sign Without Reading (or Revising)
Your builder-buyer agreement isn’t just paperwork — it’s your legal shield. Hire a property lawyer to review it, negotiate unfair terms, and ensure your rights are well protected.
In Indian real estate, those who read the fine print always win. Don’t settle for a one-sided agreement. You’re not just buying a flat — you’re signing a contract that decides your future security.
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