Drafting of RERA agreement for sale in India

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Drafting of RERA agreement for sale in India

A sale deed is a legal document depicting the transfer of title, rights and ownership of the immovable property from the seller to the buyer. The sale deed is an essential document which legally binds both the seller and the buyer otherwise transferor or transferee. A deed becomes legally bound only after the parties to the agreement acknowledge the deed or an agreement by becoming its signatories.

Entering a sale agreement during an actual sale or any type of transfer among the parties is commonly practiced, however such agreements follows various ways of documenting the details of the property.

Thus in order to bring in the standard and rigid transparency along with making the parties accountable equally in the real estate business, RERA has laid down the provisions in a such a way that all the concern parties to the property to adopt and comply the agreement of the sale prescribed by every state in which the property is located.

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It is a common practice to enter into an agreement when an immovable property (the immovable property may be of an apartment or a plot or any commercial space and so on) either on its purchase or when any kind of transfer arises in future course. With a sale agreement the rights and obligation of the parties are explained in detail and carried forward by binding the parties legally.

Though the seller makes a promise with regards of the transfer of the immovable property by intercalating an agreement yet, it doesn’t create ownership towards the buyer of the property. Thus, in order to create rights, interest and ownership a sale deed has to be enforced to the buyer.

Accordingly to reduce the pressure off the buyer and to bring out transparency in the sale of an immovable property RERA enforced agreement on sale.

This Act was introduced in the year 2016 to regulate the problem and subtle the conflict between the parties to the sales of the immovable property. The Act will be implemented at the state level and the governing authorities are responsible for –

  • Registration and approval in relation to the registration of commercial or residential properties under RERA.
  • Regulating the transaction of sale and purchase

Governing Acts

With reference to the Section 13(1) of RERA read with Section 33 of RERA states that “the act shall be in an addition and not in detonations to the law for the time being in force” which means even with the implementation of RERA, the registration of the immovable property has to be made as per the conditions laid down by the Law of Registration Act, 1908.

On the other hand, Section 89 of RERA states that “the provision of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force” which implicates that the RERA has an overriding effect over the other regulation.

Rajasthan Real Estate property is governed by

Applicable law shall mean all Acts, Rules and Regulation in force and in effect in the state of Rajasthan including –

  • Jaipur Development Act, 1953
  • Rajasthan Municipalities Act, 2009
  • Rajasthan (disposal of urban land) Rules, 1974
  • Jaipur Building Bye Law, RERA 2016

Other Acts governing Real Estate in India are governed by

  • Transfer of Property Act, 1882
  • Indian Contract Act, 1872
  • Real Estate Regulation Act, 2016
  • Registration Act, 1908
  • Indian Easement Act, 1882

Analysing RERA Act, 2016 and Registration Act, 1908 –

Section 89 of RERA Act, 2016 doesn’t consider Registration Act’s provision for the purpose of registration of agreement to sell likewise, Section 17(2)(v) of Registration Act completely neglects RERA Act, 2016.

Hence, RERA Act, 2016 shall prevail over Registration Act, 2016 only with respect to the agreement to sell.

Objectives of RERA

  • Lighting up the transparency level and to be accountable for an account of commitment toward the consumers and protect their interest.
  • Reduction of fraud by having authorized registered property by the buyers
  • Reduction in delay in the delivery of the registered property to the customer
  • Smooth operation flow with professionalism
  • Settling up arising issues with appellate tribunal

Details to be entered in an Agreement of Sale

RERA agreement of sale is a unified contract which is standardized with uniformity which varies from different states and the governance.

  • Alteration in the sale agreement are subjective of notification under RERA Act
  • Details of the parties such as name, aadhar No, PAN, residential address
  • A promoter shall not accept a sum more than 10 percentage of the cost of the immovable property.
  • Detailed particulars of the property
  • Proposed date on property handover
  • Built up area
  • Delay in payment charges
  • Bank account details
  • Terms and conditions
  • Detailed allotment of possession
  • Indemnification
  • Specific performance
  • Compliance of law and notification
  • Amendment

Important point to remember

  • The sale agreement doesn’t assume any situation with the registration made with multiple projects within the same layout. In situation as such the common area are to be handed over only during the final completion of the project
  • The sale agreement provides in case of any increase in the tax, the same shall not be implicated upon the customer for collection
  • When the Real Estate agent due to any reason delays the handover of the booked property as per the sale agreement the same shall be eligible for cancellation and any charges made by the developer such as payment of taxes and other payment couldn’t be collected or refunded from the customer end
  • With compliances to Section 61 of RERA, non-compliance of Sale Agreement attracts penal provision and a penalty of 5% on the estimated cost on the project.

Final words

An agreement or contract to sale towards an immovable property shall be as per the agreed condition of the parties and in accordance with Section 54 of Transfer of Property Act. An agreement for sale contains a promise to transfer to the buyer upon certain condition.

Supreme Court states in Durgawathi Devi Vs. Union of India a mere execution of sale agreement doesn’t transfer the ownership to the buyer rather it needs a conveyance deed to claim the title of the property. Which raises the question on how to claim the ownership and remedy that can be exercised by the customer on breach of entered sale agreement and under such circumstances Section 18 of RERA Act states that the promoter must hand over the completed project within the stipulated period of time as mentioned in the sale agreement and failing which the customer in accordance with Section 44 of RERA can either demand for return of money or sue the buyer by raising a complaint before RERA authority.

Hence, RERA Act, 2016 has a overriding effect on the Registration Act in accordance with the creation of ownership or title to the buyer. Though the sale agreement doesn’t provide with the clear ownership, the same can be enforced in the Court of Law. Nevertheless with no further no precedents over RERA dominating Registration Act.



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CS Urvashi Jain is an associate member of the Institute of Company Secretaries of India. Her expertise, inter-alia, is in regulatory approvals, licenses, registrations for any organization set up in India. She posse’s good exposure to compliance management system, legal due diligence, drafting and vetting of various legal agreements. She has good command in drafting manuals, blogs, guides, interpretations and providing opinions on the different core areas of companies act, intellectual properties and taxation.

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