The National Consumer Commission had ruled that a flat-buyer agreement was not sacrosanct, and a buyer was entitled to get his money back from the developer if he has lost interest in the property due to delay in its construction. In numerous cases the Courts and Tribunals have applied principles of equity and come to a conclusion that buyers should not be at a disadvantage merely by virtue of them being in a position subservient to that of the Developer or Builders. Instead of merely relying upon the caution to be exercised by buyers while agreeing to the terms of Sale Agreements with Developer or Builders and Builders, the Centre has gone a step ahead and created a Standard Sale Agreement for the convenience and relief of buyers and Developer or Builders both.
The Real Estate (Regulation and Development) (General) Rules, 2016 notified on October 31 by the Minister of Housing & Urban Poverty Alleviation and applicable to the five Union Territories without Legislature viz., Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep and Chandigarh , will soon bring great relief to many real estate buyers.
The most important feature of this Standard Agreement for Sale is that it is unbiased and does not let the Developer or Builders take advantage of their dominant position. It weighs the interests of the buyers for early possession against the natural contingencies that might arise while construction and brings out the best possible balance between the interests of both the Parties.
The Agreement holds time to be of essence as it requires the Developer or Builders to refund the amount to the Allottee in case of delay in handing over the possession along with the prescribed interest rates. However, it also protects the Developer or Builder in case the delay is not caused by any fault of his own. This is evident from the Force Majeure clause in the Agreement. Further to an assurance given by the Minister of Housing & Urban Poverty Alleviation to the Parliament during passage of the Real Estate Act, the Rules stipulate such refund to the Allottee be made within 45 days of it becoming due with respect to the agreed date. Developers will be required to refund or pay compensation to the Allottees with an Interest Rate of SBI’s highest marginal cost of lending rate plus 2%. Buyers who do not want to withdraw will be entitled to interest payment for the period of delay. Provided that where if the Allottee does not intend to withdraw from the Project, the Developer or Builder shall pay the Allottee interest at the rate prescribed in the Rules for every month of delay.
Guidelines notified by the Centre also for compensation in case of delayed delivery even for ongoing projects.
Other important features of the Agreement include, receiving timely payment from buyer and elaborates on certain rights of Developer or Builders such as interest in case of delay in payments by buyer and additional payments for increase in carpet area up to 3% of area originally offered. The agreement also makes it mandatory for a developer to disclose the total number of apartments, carpet area, the number and area of garage or covered parking, and the date of grant of commencement certificate by the local authority, among others things.
The Developer or Builder shall abide by the time schedule for completing the project as disclosed at the time of registration of the project with the Authority and towards handing over the Apartment/Plot to the Allottee and the common areas to the association of Allottees or the Competent Authority, as the case may be.
The Developer or Builder shall compensate the Allottee in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under the Act and the claim for interest and compensation under this provision shall not be barred by limitation provided under any law for the time being in force.
The Total Price is escalation free, except when there are increases which the Allottee agrees to pay, due to increase on account of development charges or any other increase in charges payable or imposed by the competent authority from time to time. The Developer or Builder also has to make sure that while raising a demand on the Allottee for increase in development charges, cost/charges imposed by the competent authorities, the Developer or Builder shall enclose the said notification/ order/rule/regulation along with the demand letter being issued to the Allottee, which shall only be applicable on subsequent payments.
It is significant to note that buyers unaware of these and other technical aspects will soon benefit from the Standardized agreement and be saved from being intimidated by the dominant position of the Developer or Builders and can overcome the fear of unwanted litigation in future. The delaying tactics will be reduced, making the Developer or Builders more accountable for their promises.
Such a legislation would be welcome by the States as well if not eagerly awaited for!