Buying an apartment? Top 15 points to review in your builder-buyer agreement before signing it

Last updated:Nov 16, 2024 4:27 PM IST

Here is a checklist of the most important points to look at in your BBA to ensure a smooth and safe purchasing experience.

Buying a condo is an important financial decision, and ensuring that the agreement between builder and buyer is clear, comprehensive and legally sound is critical to protecting your investment. This agreement outlines the terms and conditions of the transaction, including payment schedules, delivery times, property specifications and the responsibilities of both parties. Before signing on the dotted line, it is important to carefully examine the key clauses in the agreement to avoid future disputes or misunderstandings.

Here you will find a checklist with the most important points to check in your builder-buyer agreement to ensure a smooth and safe purchasing experience.

1. Project details

Project name and address: Ensure that the details of the flat and project are clearly stated, including the full address and specific flat number.

Size and carpet area: Check the carpet area, built-up areas and any communal areas.

Completion Date: Check expected possession date. Also confirm the penalties or compensation if there is any delay in possession.

2. Payment schedule

Payment plan: Make sure the payment plan is clear, including the deposit, installment breakdown and due dates.

Escalation clauses: Check if there are any clauses that allow the builder to increase the price after signing the agreement.

3. Title and Ownership

Land Title: Check the builder’s title to the land and ensure there are no legal disputes or encumbrances.

Approvals: Ensure that the builder has all necessary approvals, including from local authorities, RERA registration and environmental clearances.

4. Specifications of the flat

Construction Materials and Fixtures: Receive detailed specifications on the materials used in construction, including flooring, fittings and electrical fixtures.

Quality Controls: Confirm whether the builder follows quality standards and whether any guarantees are provided for materials or equipment.

5. Process of Possession and Transfer

Possession Procedure: Understand the process of taking possession, including handing over keys, installing utilities and any formalities.

Maintenance period: Check whether there is a defined period during which the builder is responsible for maintenance or repairs after commissioning.

6. Liability period for defects

Defects clause: Ensure that a provision is included for repair or restoration if there are defects in the construction or furnishings within a certain period after taking possession.

7. Change in layout

Change clause: Understand the clause surrounding changes to the original design, structure or layout. Make sure the builder cannot make significant changes without your permission.

8. RERA Compliance

RERA Registration: Check if the project is RERA registered. The agreement must mention the registration number and the builder must provide RERA documents.

Delay penalty: Ensure that a penalty clause for delay in possession (as per RERA guidelines) is included.

9. Stamp duty and registration

Stamp duty clause: Check who will bear the stamp duty and registration fees. Usually this is the buyer, but the conditions must be clear.

Registration of the sale deed: Make sure that the agreement mentions the process for registering the sale deed once the flat is ready for possession.

10. Facilities and common areas

Use of common areas: Clarify the builder’s responsibilities regarding the maintenance of common areas such as the lobby, elevators and parking lots.

Facilities: Check the listed facilities (gym, swimming pool etc.) and confirm whether these are part of the final delivery or may incur additional costs.

11. Legal Jurisdiction

Dispute Resolution: Review the dispute resolution mechanism, whether arbitration or judicial, and in which court the disputes will be heard.

12. Additional costs

Maintenance costs: Understand ongoing maintenance costs and whether they apply after ownership.

Development costs: Check if there are any hidden costs for development or infrastructure costs.

13. Transfer of Ownership

Transfer clause: Check whether the agreement allows for the transfer of ownership in case you want to sell the property before the date of possession.

14. Force Majeure Clause

Force Majeure: Make sure the agreement includes a force majeure clause, which protects both parties in the event of unforeseeable circumstances (e.g. natural disasters, legal changes) that could delay the project.

15. Builder’s Liability

Insurance: Confirm whether the builder has taken out insurance during the construction phase.

Breach of Contract: Check the penalties for a builder’s failure to meet contract obligations.

Make sure you seek legal advice before signing the agreement to avoid pitfalls. If you have a lawyer review the terms, you can protect yourself against unforeseen problems later.

Disclaimer: The views and investment tips expressed by experts in this News18.com report are their own and not those of the website or its management. Readers are advised to contact certified experts before making any investment decisions.