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Protecting Your Interests in Home Buyer’s Agreement

Mr. Ashwinder R Singh(Co-Chair CII NR Real Estate & CEO, Residential- Bhartiya Urban) - June 11, 2023 - - 0 |

Ashwinder R Singh

Homebuyer’s agreement has often been an issue of discord between developers and property buyers. First time home buyers need to be extra cautious about signing on the dotted lines.  Buyers should be fully aware about the key requirements in the ‘Agreement to Sell’, to be disclosed by the promoter under the Real Estate Regulation & Development Act 2016. Here is the checklist of a home buyer’s agreement to ensure that your interests are protected.

Carpet Area 

The home buyer must ensure that the promoter discloses the carpet area of the apartment. This is the area within the walls of the apartment. By knowing the carpet area, you will know exactly what you are paying for.

Restrictions on Withdrawal from Project Account 

In the agreement to sell, the promoter must disclose that as per mandatory requirement of RERA, 70% of the money collected from the home buyers will be kept in a designated project account known as Escrow Account. Any withdrawal of funds from this account requires a certificate of approval from the architect, engineer, and chartered accountant.

Defect Liability

Under RERA Act, the promoter is responsible for the structural defects in the project for 5 years from the date of possession as against 1 year in pre-RERA time.

Rate of Interest Payable

The agreement to sell must mention that the rate of interest payable by the home buyer and the promoter must be the same.

Payment Plan

The agreement must spell out the payment plan. Under this plan, the payment by the home buyer must be linked to the construction stages of the project. This ensures that the homebuyer pays only for the work that has been completed.

Modification of Sanction Plan

If the promoter needs to make any changes to the sanctioned plan, they must obtain the written consent of at least two-thirds of the allottees.

Force Majeure

Delays in project completion due to force majeure, such as war, acts of god, natural calamities and pandemic situations are part of the agreement.

Project Maintenance 

The promoter is responsible for project maintenance until the association of home buyers is formed.

Dispute Resolution

The agreement to sell, must specify the mechanism for dispute resolution, as provided under the RERA Act.

The writer, CEO-Residential, Bhartiya Urban Limited, is the author of Amazon Best Sellers- ‘Master Residential Real Estate’ and ‘A to Z of Residential Real Estate’

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