Best Check Your Builder Agreement Before You Sign Lawyer

Most of the disputes on this website start with a document the buyer signed in a hurry. The sales office hands over a 60-page builder-buyer agreement, says it's "the standard RERA format", and asks for it back with signatures on every page within a week, along with the next instalment. Very few buyers read it properly. Fewer still question it.

The agreement is the single most important document in your purchase. It sets the possession date, the price, what you're actually buying, what happens if either side defaults, and how disputes are resolved. Under the Real Estate (Regulation and Development) Act, 2016 many of the worst one-sided clauses of the past are no longer permitted, but agreements still contain terms that hurt buyers later. This page explains what to look for, and how we review agreements before you sign.

What RERA requires

A written agreement before more than 10%

Section 13(1) says a promoter shall not accept more than 10% of the cost of the apartment, plot or building as an advance payment or application fee from a person without first entering into a written agreement for sale and registering it under the applicable law. So if a builder is asking for 20% or 30% before you've signed and registered an agreement, that's a breach.

The agreement must be in the prescribed form

Section 13(2) requires the agreement for sale to be in the form prescribed by the state rules, and to specify particulars of development, including the construction of the building and apartment, the specifications and internal development works, the dates and manner of payments, the date of possession, the rate of interest payable on default, and other particulars. Each state has adopted a model agreement for sale in its RERA rules. In 2021 the Supreme Court also took up the question of a uniform model agreement for the whole country in proceedings before it.

Builders can add their own terms, but additions that contradict the model agreement, the Act or the rules aren't supposed to override them. In practice, builders' "RERA-compliant" agreements vary a great deal in how faithfully they follow the model.

The clauses that matter most

1. The possession date

Look for a fixed date, not a period running from an uncertain trigger. "Within 42 months from the date of approval of building plans or start of construction, whichever is later" is the kind of wording that lets a builder push the date out indefinitely. Under RERA, the agreement should state the date of possession, consistent with the completion date the builder declared in its registration.

Also check any grace period, what triggers it, and whether it's automatic.

2. Force majeure

The RERA model agreements generally define force majeure narrowly, around events like war, flood, drought, fire, cyclone, earthquake or other natural calamity affecting the project. Builders' own drafts often expand it to include "shortage of labour", "orders of any authority", "delay in approvals", "non-payment by allottees", and "any reason beyond the developer's control". The wider the clause, the easier it is for the builder to justify delay. Ask for it to be brought in line with the model.

3. Interest on delay, both ways

Under RERA, the rate of interest payable by the builder for delay and by you for late payment should be the same, at the rate prescribed in the state rules. Check that the agreement doesn't charge you 18% while promising you a few rupees per square foot. Any such clause is contrary to the rules.

4. Carpet area and price

The price should be stated on carpet area as defined in Section 2(k) of the Act. If the agreement also mentions super area, check which one the price is calculated on, and what the agreement says about increases. Model agreements generally limit the builder's right to charge for an increase in carpet area to a small margin, commonly 3%, and require a refund for any reduction.

5. Payment plan

Construction-linked plans are generally safer for buyers than time-linked plans, because you pay as the building goes up. Check that each instalment is tied to a clearly defined, verifiable stage. Be cautious about plans that front-load payments, such as 40% within the first six months, or "possession-linked" plans that ask for 90% at booking in return for a discount. If you're considering a subvention or "no EMI" scheme, read our page on subvention problems first.

6. Extra charges

Look for every charge outside the basic price: preferential location charges, parking, club membership, power backup, electrification, gas pipeline, external and infrastructure development charges, interest-free maintenance security, advance maintenance, legal and documentation charges. The agreement should state each one and its amount. Anything described as "as applicable at the time of possession" or "to be intimated later" is a future dispute waiting to happen. See our page on extra charges.

7. Cancellation and forfeiture

Check what happens if you need to cancel, and what happens if the builder cancels for your default. How much is "earnest money"? Is brokerage deducted? How quickly is the balance refunded? Some state authorities limit forfeiture, for example to 10% of the consideration. A clause allowing the builder to forfeit 20% plus taxes plus brokerage is worth negotiating.

8. Plan and specification changes

Section 14 requires your written consent for changes to your unit, and the consent of two-thirds of allottees for changes to the building or common areas. Agreements sometimes include a clause by which the buyer "irrevocably consents" in advance to any future changes. That kind of blanket consent sits uneasily with the Act. Ask for it to be removed or limited.

9. Specifications and amenities

The specifications annexure should describe flooring, fittings, doors and windows, kitchen, electrical work, lifts and common amenities precisely, with brands or equivalent standards. Vague wording like "premium quality flooring" or "branded fittings" leaves room for substitution. Compare it with the brochure and ask for anything promised in the brochure to be included.

10. Transfer and resale

If you might sell before possession, check the transfer conditions and charges. Some builders charge a high transfer fee or restrict transfers until a certain percentage has been paid.

11. Defect liability

The agreement should reflect Section 14(3): the builder must rectify structural and workmanship defects reported within five years of possession, free of charge, within 30 days. Watch for clauses that shorten this period or exclude categories of defects.

12. Conveyance and handover

Check that the agreement commits the builder to execute the conveyance deed after the occupancy certificate within the period required by Section 17, and to hand over common areas and documents to the association.

13. Dispute resolution

Some agreements contain arbitration clauses. These don't prevent you from approaching RERA or a consumer commission, but they're worth noting. Watch also for clauses that restrict the place of jurisdiction or limit the builder's liability.

Things to check outside the agreement

• RERA registration. Is the project, and the specific phase you're buying in, registered? Does the registration show the same completion date as the agreement?
• Approvals. Is there a sanctioned building plan? Environmental clearance where required? Fire approval in principle?
• Land and title. Who owns the land? Is there a collaboration agreement with a land owner? Is the land mortgaged to a lender?
• The builder's track record. How have its earlier projects fared? Are there many RERA complaints against it? Is any group company in insolvency?
• Quarterly updates. If the project has been registered for a while, do the quarterly updates show real progress?
• Bank approval. Is the project approved by major lenders? Banks do their own checks before approving projects for home loans.

Can you actually negotiate?

Buyers often assume the agreement is take-it-or-leave-it. With large developers, it often is, at least on the main terms. But there's usually more room than people think, particularly on:

• specific charges: parking, club membership, preferential location charges, legal charges;
• the specifications annexure, where you can ask for brochure promises to be written in;
• forfeiture terms on cancellation;
• transfer charges;
• the payment plan, especially for buyers paying a larger share upfront; and
• side letters confirming specific promises made by the sales team.

Even where the builder won't change the agreement, it's worth asking in writing for clarifications on vague clauses. A written answer from the builder, kept with your agreement, can be very useful later. And if the builder refuses to bring an obviously non-compliant clause into line with the RERA rules, that tells you something about how it will behave if a dispute arises.

What one-sided clauses are worth in a dispute

If you've already signed an agreement with one-sided terms, don't despair. The Supreme Court held in Pioneer Urban Land v. Govindan Raghavan (2019) that a buyer can't be bound by wholly one-sided clauses in a builder's standard-form agreement, because they amount to an unfair trade practice. And under RERA, terms that contradict the Act or the rules, such as interest rates or forfeiture that exceed what's permitted, generally can't be enforced against you. But it's far better to avoid these clauses at the start than to argue about them for years afterwards.

Registration and stamp duty on the agreement

Section 13(1) requires the agreement for sale to be registered under the applicable law before the builder accepts more than 10%. In some states, registration of agreements for sale is compulsory and attracts stamp duty; in others, the practice differs. Registration gives the agreement legal standing against third parties and is evidence of the date and terms. Ask the builder how and when the agreement will be registered, and who bears the stamp duty and registration fees.

Buying in resale

If you're buying an under-construction or completed unit from an existing allottee rather than from the builder, the review is different. Check:

• the original agreement and every addendum, since you'll step into the seller's position;
• the builder's statement of account for the unit, showing what's been paid and what's due;
• the builder's consent to the transfer, transfer fees and the transfer procedure;
• any loan on the unit and the bank's no-objection;
• whether any disputes, complaints or cancellations are pending;
• for completed units, the occupancy certificate and the conveyance deed in the seller's name; and
• whether your delay claim, if the project is late, will start from the original due date or from your purchase date, since authorities have taken different views.

Red flags in a builder's agreement

Some clauses should make you pause before signing. If you see any of these, ask questions and get advice.

• "The possession period shall commence from the date of start of construction", with no definition of when construction starts.
• "The developer shall not be liable for any delay caused by reasons beyond its control", with a long list of such reasons.
• "The allottee shall pay interest at 18% per annum on delayed payments", alongside delay compensation for the buyer at a few rupees per square foot.
• "The super area is tentative and may vary by up to 15%", with the buyer paying for any increase.
• "The allottee irrevocably consents to any change in the layout, building plans or specifications".
• "Earnest money shall mean 20% of the total sale consideration".
• "The allottee shall not raise any claim upon taking possession".
• "All taxes, levies and charges, present or future, shall be borne by the allottee", without limits.
• "The developer may assign or transfer the project without the allottee's consent", which conflicts with Section 15.
• "Possession may be offered prior to receipt of occupancy certificate".

None of these clauses is unusual. Many appeared in pre-RERA agreements, and versions of them still appear in some agreements today. Under the Act and the case law, several of them are unlikely to be enforced against you if challenged. The point of reviewing the agreement is to avoid needing that challenge.

Plots, commercial units and other purchases

Agreements for plots, shops and offices have their own pitfalls.

• Plots: check the licence or approval, the sanctioned layout showing your plot, the infrastructure to be provided and by when, what "possession" means for a plot, and any building restrictions.
• Commercial units: check carpet area against super area, permitted use, maintenance arrangements, any leasing or assured return terms, and whether common areas and parking are being retained by the builder.
• Service apartments and studios: check whether the unit is approved as residential or commercial, which affects use, utilities, tax and loan eligibility.

Our page on plot and commercial buyer rights covers these in more detail.

After you sign

Once the agreement is signed:

• keep a complete signed copy, with every page and annexure, and the registration receipt;
• check the registered copy matches what you signed;
• start a folder for receipts, demand letters and correspondence, in date order;
• note the possession date and any grace period in your calendar;
• check the RERA portal every quarter for the project's progress updates; and
• keep the brochure and any written promises from the sales team.

If something goes wrong later, a well-kept file makes every step easier and cheaper.

Questions to ask the sales team, in writing

Before signing, send the builder a short email with questions like these, and keep the reply with your agreement. A written answer from the builder's authorised representative can matter a great deal in a later dispute.

1. What is the exact date of possession, and does it match the completion date in the project's RERA registration?
2. What is the carpet area of the unit, and what is the price per square foot of carpet area?
3. What are all the charges payable beyond the basic price, and their amounts?
4. Is the payment plan construction-linked, and how will each stage be verified?
5. Has the building plan been sanctioned, and has environmental clearance been obtained where required?
6. Who owns the land, and is it mortgaged? If so, to whom?
7. Are the amenities in the brochure part of the sanctioned plan, and by when will they be completed?
8. What are the cancellation terms, and how much would be deducted if I cancelled?
9. What is the transfer fee if I sell before possession?
10. When will the agreement be registered, and who pays stamp duty?

If the builder won't answer some of these questions in writing, that's useful information in itself.

Our view

A review before signing is the cheapest legal help a home buyer can get, and often the most valuable. It won't stop a determined builder from delaying, but it will make sure your agreement gives you the protection RERA intends, so that if the project goes wrong, your position is as strong as it can be from the start. We review agreements for flats, plots and commercial units in projects across Delhi NCR, and through associates in other states.

If you're taking a home loan

When a bank finances your purchase, you'll usually sign three documents: the agreement for sale with the builder, the loan agreement with the bank, and often a tripartite agreement between all three. These should be read together, because they interact.

• Disbursement. Check that the tripartite agreement ties the bank's disbursements to construction stages, not to the builder's demands alone.
• Cancellation and refund. Check what happens to the bank's money if the allotment is cancelled or the project fails. Many tripartite agreements oblige the builder to refund the bank directly.
• Pre-EMI or subvention. If the builder is paying any part of your interest, check exactly what it has promised, for how long, and what happens if it stops.
• Your rights against the builder. Make sure nothing in the tripartite agreement waives your rights under RERA, such as delay interest.
• Security. Understand what the bank holds as security and when it will be released.

A small amount of time spent on these three documents together at the start can prevent the most painful kind of dispute later: one where you're paying a bank for a flat you can't get, while the builder points to the bank and the bank points to you.

How we review an agreement

1. Read the full agreement, with every annexure, the payment plan and the specifications.
2. Compare it with the state's model agreement under the RERA rules, and flag every departure.
3. Check the RERA registration and uploaded approvals, and confirm that the declared completion date, carpet area and specifications match.
4. Review the brochure and price list, and identify promises that should be written into the agreement.
5. Give you a written note listing the clauses that are risky, those that are contrary to RERA, and those worth negotiating, in plain language, with suggested wording where useful.
6. Draft a letter to the builder asking for changes or written clarifications, if you want one.
7. Review the final version before you sign.

A review is usually done within a few working days of receiving the documents. If the builder is pressing you to sign quickly, tell us the deadline, and we'll prioritise the clauses that matter most.

Documents we need

• The draft agreement for sale, with all annexures
• The allotment letter or booking form, and receipts for any payment already made
• The payment plan and price list
• The brochure and any marketing emails
• The RERA registration number of the project
• Any loan sanction letter or tripartite agreement, if you're taking a loan
• For resale purchases: the seller's documents and the builder's statement of account

Frequently asked questions

Can a builder take more than 10% before signing an agreement?

No. Section 13(1) prohibits a promoter from accepting more than 10% as an advance or application fee without first entering into a registered written agreement for sale.

Does the agreement have to follow a fixed format?

Section 13(2) requires the agreement to be in the form prescribed by the state rules, which set out a model agreement for sale.

Can I negotiate a builder's agreement?

Often on specific charges, specifications, forfeiture and transfer terms, even where the main structure is fixed. Ask in writing.

What's the most important clause to check?

The possession clause: a fixed date, a limited grace period and a narrow force majeure clause. That's what most later disputes turn on.

The agreement charges me 18% interest for late payment. Is that allowed?

Under RERA, interest for late payment by the buyer and for delay by the builder should be at the same prescribed rate. A higher rate charged only to the buyer is contrary to the rules.

Should my agreement mention carpet area?

Yes. Under RERA, the price should be on carpet area, and the agreement should state it.

I've already signed. Is it too late?

Not for understanding your position. Clauses contrary to RERA, or wholly one-sided terms, can be challenged later. Knowing where you stand helps you avoid signing anything worse.

Does an arbitration clause stop me from going to RERA?

No. You can still approach RERA or a consumer commission.

General information about builder-buyer agreements under the Real Estate (Regulation and Development) Act, 2016. Model agreements differ by state. Not legal advice.