Critical aspect of builder-buyer agreement
BY
Realty Plus
Sandeep Shah, Partner, N.A Shah Associates LLP threw light on critical aspects of builder-buyer agreement and the often neglected terms and conditions
What are the critical aspects of builder-buyer agreement?
Critical aspect of builder-buyer agreement will depend on whether the project is RERA registered or not. The RERA provides a model bye laws and most of the developers have adopted the model bye law as a basis of preparing the agreement. The builder-buyer agreement being a legal document it is always essential that the buyer avails of the services of a professional to protect the interest of the buyer. Some of the critical aspects of the agreement are (a) penal provisions in case of delay/ non payment of the instalments (b) rights of the purchaser in case of delay in possession of the promised unit (c) warranty towards structural defects (d) clarity on the amenities, make of the equipments (if being supplied) example washing machine, kitchen equipements (e) conditions imposed before the agreement can be assigned to 3rd party etc.
If the project is not RERA registered, the precautions are even greater as in case of default the buyer will have to pursue the matter with consumer court or seek action by filing a criminal case against the builder or developers.
What are the often neglected terms and conditions that should be properly evaluated?
The often neglected terms and conditions is the warranty provisions, make of the amenities as many developers promise white goods without specifying the make, model, capacity etc of the white goods, the rights of assignment and transfer charges, rate of interest for default in payment of instalments.
How to ensure the agreement is unbiased towards each party (builder as well as buyer)?
The model agreement under RERA is a good starting point. An unbiased agreement gives equal rights and obligations to the developer and buyer. The developer cannot be saddled with a situation where the buyer does not pay the instalments within time stipulated and at the same does not have remediy against the buyer for a speedy resolution. Many projects are stuck due to cash flow challenges where the developer has fulfilled their promise of construction of building as per schedule but the buyers have defaulted in payment. In such situation, the developer will have to raise alternate source of funds at expensive rate and it is not always possible to do so as developers may not have sufficient collateral to offer to the lender.
Similarly, if the buyer has fulfilled its obligation of payments in time, it must also have right to resolve the situation if the developer is lagging behind the construction schedule.
Importance of involving a property lawyer while buying property, flat or a land
Any transaction of immovable property has various compliances to be done and it also differs from state to state. A good title is possible only if a knowledgeable and experienced professional is involved. The knowledge is not only in regard to conveyancing but also in regard to property taxes, procedure and formalities under Co-operative societies Act, restrictions regarding acquisition of agricultural and non agricultural land, disputes or objections or lien recorded in regard to the property under consideration and so forth.
Tags :
Interviews
RERA
Builder-Buyer Agreement
Sandeep Shah
equal rights and obligations
property lawyer
N.A Shah Associates LLP