SC Recommends Framing “National Model Builder-Buyer Agreement”

The country should have a “national model builder-buyer agreement” to ensure homebuyers are not left at the mercy of whimsical clauses included by real estate developers in their contracts, the Supreme Court said as it implored the Union government to contemplate framing a standard form housing agreement. A bench of justices Dhananjaya Y Chandrachud and Surya Kant underscored the “helplessness” of the people, especially middle-class homebuyers, while urging the Centre to examine the pertinent provisions of the Real Estate Regulation and Development (RERA) Act to consider framing a model agreement. “This issue is very important. We want a national model builder-buyer agreement to be framed by the Union government. At present, across the states, builders can put any term and exploit unwitting buyers. We want the Union to intervene instead of states having their own regulations,” the bench told solicitor general Tushar Mehta, who represented the central government. The bench added that it is examining the petition filed by advocate Ashwini Kumar Upadhyay in the larger public interest. It pointed out that the national model agreement should ideally contain certain standard stipulations binding on all builders. “There must be some essential terms which cannot be deviated from... which must be non-negotiable in the interest of the buyers,” the bench added. It emphasized that RERA is a central legislation and therefore, the central advisory committee, appointed under RERA, should consider framing the standard agreement. In October 2021, the bench had issued notices to the Centre, states and Union territories and the Law Commission of India on the clutch of petitions. In its order, the court had referred to sections 41 and 42 of RERA, under which the central advisory council has been obligated to make recommendations to the Centre for framing standard rules to subserve public interest in ensuring that buyers of real estate are not exploited. Responding to the court notice, the central government filed its affidavit in November 2021, stating that a draft “agreement for sale” was shared with all the states and Union territories in 2016 itself after the implementation of RERA. The Centre put it on the state governments to enforce the terms of any standard form agreement after notifying the rules. Under RERA, the Centre has left it to the states to frame appropriate rules within six months under Section 84 of the Act for implementing the law. In some states, builders get their way and agreements are one-sided. There is no transparency or fair play to restrain builders from indulging in frauds and delays and to protect the flat purchasers from getting duped. The petition also demanded that homebuyers should be compensated for the losses incurred due to inordinate delays on the part of builders and promoters.